What is an example of a preventive control?

Access controls to restricted systems are an excellent example of a preventive control because they are designed to limit access to sensitive information or critical systems only to authorized personnel. This proactive measure helps to prevent unauthorized access, potential data breaches, and insider threats before they occur. By establishing these controls, an organization can significantly reduce the likelihood of security incidents and ensure that its internal accounting systems and sensitive financial data remain protected.

Preventive controls, in general, are designed to deter undesirable actions and mitigate risks before they manifest as problems. In contrast, other options like annual audits and regular financial reconciliations are considered detective controls because they identify issues after they have occurred, while fraud detection software is more of a detective or reactive control, aiming to identify and respond to fraudulent activities rather than preventing them outright. Such distinctions are critical in understanding how different types of controls contribute to an organization’s overall internal control environment.