The PCAOB's AS No.5 states that internal controls may be preventive or detective. Which of the following controls is preventive?
A)Requiring two persons to open mail containing payments.
B)Reconciling the accounts receivable subsidiary file with the control account.
C)Using batch totals.
D)Preparing bank reconciliations.

Question

Quizplus · Accepted Answer

Requiring two persons to open mail containing payments is a preventive control because it is designed to prevent errors or fraud from occurring in the first place, by ensuring that no single person has control over opening payments. The other options are detective controls, which are designed to detect errors or fraud that have already occurred.