Which type of control is designed to prevent errors before they occur?

Preventative controls are specifically designed to stop errors before they happen, making them a crucial element in risk management and the internal control structure of an organization. These controls operate proactively, seeking to eliminate the possibility of mistakes or irregularities from occurring in the first place.

For example, in an accounts payable context, preventative controls might include implementing stringent vendor validation processes before payments are made, ensuring that all invoices are reviewed for accuracy and legitimacy before they are processed, and using automated workflows that require approvals at multiple levels for significant transactions. Each of these measures helps to avert issues such as duplicate payments, fraud, or miscalculations before they can affect financial reporting or operational efficiency.

In contrast, general controls apply to the overall IT environment, while application controls are specific to individual applications and processes. Detective controls, on the other hand, come into play after an error has occurred. They are designed to identify and report anomalies, rather than prevent them, making them reactive rather than proactive. This distinction highlights the essential role that preventative controls play in maintaining the integrity of financial processes.