We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are Detective Controls?

Mary McMahon
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Detective controls are measures a company uses to identify irregularities so they can be corrected, ideally as promptly as possible. Laws like the Sarbanes-Oxley Act of 2002 mandate the use of internal controls to address common accounting and ethics problems, and companies also want to use controls to avoid waste, fraud, and other issues they may encounter in the course of doing business. The counter to detective controls are corrective controls, which are measures to prevent problems from occurring in the first place.

One example of a detective control is an audit. Most companies hold regular external and internal audits to review financial statements, scrutinize departments, and determine if there are any irregularities. These could include signs of embezzlement and fraud within a company, as well as activity suggestive of an attempt to conceal financial problems from investors, regulators, and the general public. Companies may use surprise audits as another form of detective control, so people never know when to expect an evaluation.

Other detective controls can include triggers for certain types of activity, such as warning alerts that will show up when people engage in financial transactions that appear irregular. If a department always issues a check to the same vendor for the same amount, a sudden change might be a cause for concern, and a detective control could be set up to notify the accounting department when variations like this occur so they can find out what happened and why.

Companies may use measures like mandatory reporting forms so they can catch irregular activity early, often in the form of financial statements that do not match what a person or department is actually doing. These detective controls can involve things like automatically sending data to accounting for review, providing continuous auditing so people can catch anything unusual almost as soon as it happens. Accountants and attorneys can work together to develop appropriate and effective controls.

Some detective controls are set out by law and companies must show that they are using them and complying with regulatory standards on how to use those controls. Others are considered part of generally accepted standards and practices, and while they are not explicitly required, they are a very good idea. Companies deviating from accepted practices can be targets for concern and suspicion, as people will want to know why they are not keeping pace with other companies in terms of accounting practices. Other controls may be optional, but recommended, for legal or ethical reasons.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.