What are preventative controls designed to do?

Preventative controls are specifically designed to keep errors or fraud from occurring by implementing measures that deter undesirable events before they happen. These controls proactively address the potential risks, thereby reducing the opportunities for errors or fraudulent activities within the credit union or any organization. Examples of preventative controls include employee training programs, access restrictions to sensitive information, and the establishment of standard operating procedures that delineate correct processes.

In contrast, detecting errors or fraud pertains to controls that identify issues after they have occurred, which is not the purpose of preventative controls. Corrective actions, on the other hand, aim to fix errors or irregularities after they have been identified, while the idea of establishing desired outcomes relates more to strategic planning rather than the specific function of preventing the occurrence of errors or fraud. Thus, the focus of preventative controls is on preemptive strategies that safeguard the organization.