The purpose, stated plainly.
WHAT A CONTROL IS
Something that makes an error or a loss less likely, or detects it when it happens.
WHAT CONTROLS ARE FOR
Protecting assets from loss and theft Producing reliable information Ensuring things are done as intended Meeting obligations
WHY THEY MATTER IN SMALL BUSINESSES
Losses are proportionally larger and there is less capacity to absorb them.
WHAT PEOPLE ASSUME
That controls are bureaucracy for large organisations.
WHY THAT IS WRONG
Every control exists because something went wrong somewhere.
WHAT THE TWO TYPES ARE
Preventive: stopping something from happening
Detective: identifying it afterwards
WHY BOTH ARE NEEDED
Prevention fails, and detection without prevention means discovering losses after they occur.
WHAT EXAMPLES LOOK LIKE
Preventive: requiring approval before payment
Detective: reconciling the bank account
WHAT CONTROLS CANNOT DO
Eliminate risk entirely Prevent collusion between people Work if they are bypassed by management
WHY MANAGEMENT OVERRIDE MATTERS
It is the weakness in every control system, and it is how most significant losses occur.
WHAT TO ESTABLISH
That controls apply to everyone, including owners.
WHAT DETERMINES WHETHER CONTROLS WORK
Whether they are actually performed Whether anyone checks that they are Whether exceptions are followed up
WHAT TO TREAT THIS CATEGORY AS
Practical guidance, scaled to your size.
