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ACCA Strategic Professional · Strategic Business Leader · Internal control and management reporting

At Lumen Retail, a warehouse system automatically rejects any goods-received entry that does not match an open purchase order. The control is intended to stop receipts of unauthorised goods being recorded. How is this control best classified?

It is a preventive, automated control. The system blocks goods-received entries lacking a matching purchase order, so the unauthorised receipt is stopped before it is recorded, and it works through system logic rather than human action. A detective control would only find the problem after the entry had been posted.

  1. ADetective, manual control
  2. BCorrective, automated control
  3. CPreventive, automated controlCorrect
  4. DDirective, manual control

Explanation

The system stops the unauthorised entry from being recorded, so it acts before the error occurs, which makes it preventive. It operates by system logic without human intervention, so it is automated. A detective control would instead identify errors after posting, such as a review of exception reports.

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