What is Accounting Control?
Accounting control is the method of ensuring the efficiency and validity of financial statements and managing risks. Accounting control helps to mitigate the risks in the organization and apply safeguards.
Accounting control teaches us to follow the law and create a fully controlled environment in the organization. There are two types of accounting control:
- Preventive Controls
- Corrective Controls
Prevention control means to control an issue before occurring. It helps to mitigate costs and wastes related to the problem. Generally, preventive control is ensured by creating some rules and policies.
Corrective controls are done to correct or fix any problems in the organization. Any steps taken to correct any mistake in the financial statement can be referred to as corrective control.