detective control
a control that detects undesirable events that have already occurred
Detective controls are a type of internal control that organizations use to detect or identify errors, fraud, and other problems within their operations. The purpose of these controls is to allow managers and auditors to investigate and take corrective actions as needed.
Some examples of detective controls include:
1. Fraud detection software – This software uses algorithms to analyze financial transactions and identify patterns that may indicate fraud.
2. Audits – An external or internal audit can be conducted periodically to review businesses’ financial statements, processes and operations for any discrepancies.
3. Review of financial statements – Regular review of all financial statements, reports, ledgers, and accounts receivable can be used to identify fraudulent transactions and discrepancies.
4. Physical counts – Periodic inventory counts can help to detect theft, errors, or over-shipment of products.
5. Surprise cash counts – Regularly taking unannounced cash counts can help to detect any missing or surprising cash transactions.
The use of detective controls helps organizations identify potential issues and correct them promptly, minimizing losses and damage whilst also ensuring that future problems are prevented.
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