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Control activities are the policies and procedures a company can use to ensure that its objectives are achieved. Control activities are the specific procedures designed:
* to prevent errors that may arise in processing information or
* to detect and correct errors that may may arise in processing information.
ISA Categorises control activities into the following types which a company can implement as part of it internal control procedures.
* Performance review- these will include reviews and analyse of actual performance against budget, forecasts and prior period performance . Most of these control activities will be performed by management and are called management controls,e.g Supervision by management of the work of subordinates.
* Information processing- consisting of a variety of controls used to check the accuracy, completeness and authorisation of transactions , e.g application controls and general IT contols
* Physical controls- these will include controls over the physical security of assets and records to prevent unauthorised use, theft or damage, e.g limiting access to stockholding area.
* Segregation of duties- a company can use this control activity to assign people the responsibilities of authorising, recording transactions and maintaining the custody of assets. This may help to reduce the likelihood of an employee being able to both carry out and conceal errors or fraud.
However, it is important to note that sound system of internal controls reduces, but cannot eliminate the possibility of poor judgement in decision -making, human error, processes being deliberately circumvented by employees and others, management overriding controls and the occurrence of unforeseeable circumstances.
