Internal Control Program
Preventative and Detective Controls
Preventative Controls
Internal controls are actions taken to make sure the right things happen and the wrong things don't. There are two types of internal controls: preventative controls and detective controls.
Preventative controls are designed to keep errors or irregularities from occurring in the first place. They are built into internal control systems and require a major effort in the initial design and implementation stages. However, preventative controls do not require significant ongoing investments.
Detective Controls
Detective controls are designed to detect errors and irregularities which have already occurred and to assure their prompt correction. These controls represent a continuous operating expense and are often costly, but necessary. Detective controls supply the means with which to correct data errors, modify controls or recover missing assets.
Internal Control Standards
Internal controls must meet basic standards to ensure that adequate internal control systems are established and maintained. There are two types of internal control standards: general and specific. General internal control standards describe what we want to achieve while specific internal control standards tell us how to achieve those objectives. Below are examples of general and specific internal control standards. Each example is followed by a brief explanation.
General Standards
Reasonable Assurance
Internal control systems should provide reasonable assurance that the objectives of the organization will be accomplished.
Supportive Attitude
Managers and employees should maintain and demonstrate a positive and supportive attitude toward internal controls at all times.
Competent Personnel
Managers and employees should have personal and professional integrity and maintain a level of competence that allows them to accomplish their assigned duties, as well as understand the importance of developing and implementing good internal controls.
Control Objectives
Internal control systems should help to assure compliance with laws and that the campus meets its goals and objectives.
Control Techniques
These are the means to accomplishing the objectives of the internal control systems (i.e. Specific Internal Control Standards).