Which of the following are the two main types of internal controls?

The two main types of internal controls are generally classified as preventive and detective controls.

Preventive controls are designed to deter or prevent errors or irregularities from occurring in the first place. They are proactive in nature and aim to eliminate the possibility of an issue before it can happen. Examples include authorization processes, segregation of duties, and access controls, which help ensure that only authorized personnel can perform certain actions, thereby minimizing the risk of fraud and error.

Detective controls, on the other hand, are put in place to identify and detect errors or irregularities that have already occurred. They serve as a means of monitoring activities and outcomes to catch issues post-occurrence. Examples include reconciliations, audits, and exception reports. These controls provide a safeguard by allowing organizations to identify problems after they arise, facilitating timely corrective measures.

The combination of both preventive and detective controls is essential for a robust internal control system, as preventive measures help minimize risk proactively, while detective measures ensure that any incidents that do occur can be swiftly addressed.