All 18 Internal Controls Evaluation questions
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What are the five components of internal control (COSO framework)? What is segregation of duties? What is the control environment and why is it foundational? What is a walkthrough test? How does the auditor obtain an understanding of internal control? What is the difference between design effectiveness and operating effectiveness? What are entity-level controls versus process-level (transaction) controls? What is the difference between manual and automated controls? When does the auditor decide to test controls versus take a fully substantive approach? How do you document the understanding of internal controls?
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Auditing & Assurance › Internal Controls Evaluation

What is the difference between preventive and detective controls?

Intermediate

Answer

Preventive controls stop errors or fraud before they occur (e.g., approval limits, access restrictions, segregation of duties). Detective controls identify errors or fraud after they occur (e.g., reconciliations, exception reports, physical counts). A good system combines both; detective controls catch what preventive controls miss and support timely correction.
Real-world example Approval limits prevent unauthorized spend (preventive), while bank reconciliations detect any that slips through (detective).

Common follow-ups: Give an example of each. | Why combine both types?

Audit Risk & Materiality Audit Evidence & Procedures Internal Controls Evaluation
All 18 Internal Controls Evaluation questions