Internal controls for every organization are different; however, they may be divided into three major groups: preventive, detective, and corrective
ACC 210 Week 2 DQ 3
Internal controls for every organization are different; however, they may be divided into three major groups: preventive, detective, and corrective. What are two examples of each group, and in what circumstance would they be required? 1. Preventive controls are the operations put in place by management to prevent
any issues from occurring. Enterprise risk management in particular serves as a very important guidance. First, management is responsible for recording every scenario. Second of all, management is responsible for implementing preventative controls to limit the chances of any problem they might anticipate. In regards to cash payouts, preventative controls are never guaranteed so its important for organizations to establish a way to detect why preventative controls fail.
2. Detective controls – This applies because its impossible to introduce
preventative controls that will prevent every single conflict. However, controls which will help determine when and why preventative controls have failed, it would be more efficient to the organization. For example, assuming that a company´s information system establishes daily accounting performance reports for management.
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