PREVENTATIVE CONTROLS
- Policies and procedures that do not allow certain events to occur
- Proactive in nature
- Typically first line of defense
Examples
- Petty cash on premises is kept in a locked safe
- Journal entries must be approved before being posted to the general ledger
1 – Preventative – as they name suggests, these policies and procedures which prevent events or actions from occurring
-Proactive in nature
-Often the ‘first line of defense’
Examples:
Petty cash kept in locked safe – this prevents someone from opening the safe and removing cash
Journal entries must be approved – this prevents incorrect or fraudulent entries from being posted to the GL
A company might install a firewall to prevent unauthorized access to the company’s network, thereby safeguarding information from hackers