What are Control Activities?

Control activities are those policies and procedures used to ensure that an organization carries out the directives of the management team. There are many control activities, including the segregation of duties to require the involvement of multiple personnel in transactions, and the physical safeguarding of assets to reduce their risk of loss.

A risk audit may uncover instances in which more controls are needed, in which case management may elect to install additional control activities. The volume of control activities installed is limited by their cost-effectiveness. Typically, only highly cost-effective control activities will be installed.

Examples of Control Activities

There are many types of control activities, of which the following are commonly used:

Approvals. A manager must approve of an activity before it can be implemented.
Reconciliations. This involves matching two sets of records to see if there are any differences. Reconciliations are a useful step in ensuring that accounting records are accurate.
Segregation of duties. The segregation of duties is the assignment of various steps in a process to different people. The intent behind doing so is to eliminate instances in which someone could engage in theft or other fraudulent activities by having an excessive amount of control over a process.
Verifications. Someone verifies that an activity was completed in the manner authorized by management.