What type of control does a requirement for branch manager approval of high-value transactions represent?

What type of control does a requirement for branch manager approval of high-value transactions represent?

• A. Detective
• B. Preventive
• C. Corrective
• D. Directive

Answer: (B)

A requirement for branch manager approval of high-value transactions is an example of a preventive control. This type of control is designed to inhibit undesirable events from occurring before they happen. By requiring approval from a branch manager, the organization ensures that transactions are reviewed and assessed for legitimacy and appropriateness before they are processed. This layered approach helps to minimize the risk of fraud, error, or unauthorized transactions, thereby safeguarding the organization’s assets and maintaining the integrity of its operations. Preventive controls, in this context, help to establish a culture of accountability and oversight, ensuring that significant transactions undergo scrutiny, which decreases the likelihood of financial loss or compliance issues.

A requirement for branch manager approval of high-value transactions is an example of a preventive control. This type of control is designed to inhibit undesirable events from occurring before they happen. By requiring approval from a branch manager, the organization ensures that transactions are reviewed and assessed for legitimacy and appropriateness before they are processed. This layered approach helps to minimize the risk of fraud, error, or unauthorized transactions, thereby safeguarding the organization’s assets and maintaining the integrity of its operations.

Preventive controls, in this context, help to establish a culture of accountability and oversight, ensuring that significant transactions undergo scrutiny, which decreases the likelihood of financial loss or compliance issues.