Question

What type of internal controls finds the problem before it occurs?

a. Detective controls.
b. Preventive controls.
c. General controls.
d. Corrective controls.

Answer 1

Preventive controls are the type of internal controls that find the problem before it occurs.

Step-by-step explanation:

Preventive controls are the type of internal controls that find the problem before it occurs. These controls are designed to prevent errors, fraud, and other issues from happening in the first place. They involve measures such as setting up approval processes, segregating duties, implementing policies and procedures, and conducting regular audits to ensure compliance.

For example, a company may have a preventive control in place by requiring two employees to approve any purchase above a certain amount, ensuring that no single person has complete control over the purchasing process. This control helps minimize the risk of fraudulent or unauthorized purchases.