ACCA Applied Knowledge · Business and Technology · Internal controls
Which of the following best describes a preventive control in a business's internal control system?
A preventive control is designed to stop an error or irregularity from happening in the first place. Examples include authorisation limits and passwords. It differs from detective controls, which find problems afterwards, and corrective controls, which fix problems once they have been identified.
- AA control designed to stop an error or irregularity occurring in the first placeCorrect
- BA control designed to find errors after they have already happened
- CA control designed to repair damage once an error has been found
- DA control designed to report errors to external auditors
Explanation
Preventive controls operate before or at the point of a transaction to stop errors or fraud from occurring. Detective controls find problems after they occur, and corrective controls fix them. The option describing finding errors after the event is detective, not preventive.
Did you get it right without looking?
One question tells you little. A timed set on Internal controls shows your real accuracy, how long you take and where you lose marks.
More Internal controls questions
- The board of Corvin plc wants to report on internal controls in the annual report in line with good governance practice. Which of the follow…
- A company has weak preventive controls over supplier master file changes, but its management is considering relying instead on a monthly exc…
- An internal auditor at Brandt Co finds that purchase orders above the approval limit were repeatedly authorised by one manager alone. Which …
- The head of internal audit at Kestrel Co currently reports to the finance director, whose department is often the subject of audit reviews. …
- A retailer's server holds customer data. Overnight, a fire destroys the server room. The company restores operations within hours using an u…
- Marlow Co's accounting system rejects any purchase order above $5,000 unless a manager's electronic approval code has first been entered. Wh…