Definition of Detective control:
Detective control is an accounting term that refers to a type of internal control intended to find problems within a company's processes once they have occurred. Detective controls may be employed in accordance with many different goals, such as quality control, fraud prevention, and legal compliance. One example of a detective control is a physical inventory count, which can be used to detect when actual inventories do not match those in accounting records.
In small firms, internal controls can often be implemented simply through management supervision. At large firms, however, a more elaborate system of internal audits and other formalized safeguards is often required to adequately control the company's operations.
Financial control technique based on regular external audits, and surprise internal audits, for early discovery of problems and to deter fraud or leakage of funds.
How to use Detective control in a sentence?
- The Sarbanes-Oxley Act was established in the U.S. in 2002 to enact stricter measures around internal controls in light of the many accounting scandals at the time.
- Examples of detective controls include physical inventory checks, reviews of account reports and reconciliations, as well as assessments of current controls.
- A detective control is a type of internal control that seeks to uncover problems in a company's processes once they have occurred.
- Preventive controls stand in contrast to detective controls, as they are controls enacted to prevent any errors from occurring.
Meaning of Detective control & Detective control Definition