Detective Control

AAA

DEFINITION of 'Detective Control'

A type of internal control mechanism intended to find problems within a company's processes. Detective control may be employed in accordance with many different goals, such as quality control, fraud prevention and legal compliance.


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.

INVESTOPEDIA EXPLAINS 'Detective Control'

The presence of adequate internal controls is important to investors as an assurance that financial and other disclosures are accurate, and that they are not being defrauded by managers or employees. In the U.S., the Sarbanes-Oxley Act of 2002 imposes a variety of legal requirements on public companies which are designed to ensure that firms have adequate controls in place. The Act requires offers to certify that they have systems of internal control in place, and that they regularly evaluate the effectiveness of the controls. External auditors are also required to evaluate the effectiveness of internal controls over financial reporting.

RELATED TERMS
  1. Acceptance Sampling

    A statistical measure used in quality control. A company cannot ...
  2. Internal Audit

    The examination, monitoring and analysis of activities related ...
  3. Sarbanes-Oxley Act Of 2002 - SOX

    An act passed by U.S. Congress in 2002 to protect investors from ...
  4. Capital Control

    Any measure taken by a government, central bank or other regulatory ...
  5. Accounting Control

    Methods and procedures that are implemented by a firm to help ...
  6. Strategic Management

    The management of an organization’s resources in order to achieve ...
Related Articles
  1. 12 Things You Need To Know About Financial ...
    Investing Basics

    12 Things You Need To Know About Financial ...

  2. Evaluating The Board Of Directors
    Insurance

    Evaluating The Board Of Directors

  3. How To Avoid Falling Prey To The Next ...
    Brokers

    How To Avoid Falling Prey To The Next ...

  4. Examining A Career As An Auditor
    Professionals

    Examining A Career As An Auditor

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center