What type of controls are considered manual or automated processes aimed at stopping something bad from happening?

Preventive controls are designed to stop fraudulent activities or errors before they occur. These controls serve as a frontline defense, implementing processes, procedures, and measures that deter or eliminate the opportunity for wrongdoing. By establishing such controls, organizations aim to minimize risks and enhance overall operational integrity.

For instance, preventive controls may include policies for employee background checks, segregation of duties, access controls to sensitive information, and mandatory training on ethical conduct. These mechanisms are integral to fostering an environment that discourages fraudulent behavior.

Understanding this concept is crucial for fraud examiners, as the effectiveness of preventive controls directly impacts an organization’s ability to mitigate fraud risks before they escalate.