Answered Essay: Strategic Management: A Competitive Advantage Approach, 16th Ed Fred R. David & Forest R.

Strategic Management: A Competitive Advantage Approach, 16th Ed Fred R. David & Forest R. David. ISBN 978-0-416784-8.2.Provide an example of a “preventative internal control” and discuss WHY such controls are important.

Expert Answer

Preventative control are used and designed for discouraging errors or irregularities from taking place. These are proactive controls that aid to meet departmental objectives.

The examples of preventative internal control are segregation of duties that are designed for reducing the risk of error. There is division done between responsibilities for approval, accounting and custody.

Security of assets that are preventive and detective category ate also one of the many examples. This includes access to equipments, securities, inventories, restricted assets and control records.

Such controls are important for managing risks effectively. They are part of corrective controls and help in communication of risks. It is also necessary for preventing fraud, misstatement and make segregation of duties effective.

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