ACCA Strategic Professional · Strategic Business Leader · Internal control and management reporting
Tamsin Foods requires that all supplier bank detail changes are confirmed by telephone to a known contact and signed off by a second employee before being updated. Management also reviews a weekly report of all bank detail changes. Which statement correctly describes these controls?
The telephone confirmation and second-person sign-off are preventive controls because they operate before the change is made, while the weekly report review is a detective control because it identifies unusual changes after they have occurred.
- ABoth are detective controls because they relate to supplier fraud
- BThe confirmation and second sign-off are preventive controls, and the weekly report review is a detective controlCorrect
- CThe confirmation and second sign-off are corrective controls, and the weekly report review is preventive
- DBoth are directive controls because they are set out in procedures
Explanation
Confirming and approving a change before it takes effect stops fraudulent changes, so these are preventive. The weekly report is reviewed after changes have been made to identify anything unusual, so it is detective. Corrective controls would remedy the consequences after detection.
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