CIMA P3 Syllabus C. Internal controls - Types of Internal Controls - Notes ^{2 / 21}

Financial controls include budgets, standard costing and investment appraisal techniques. 

Non-financial controls vary depending on whether they are quantitative (such as KPIs and appraisal scores) or qualitative (such as structure charts, codes of conduct and procedures manuals).

Prevent, detect, correct, direct

Prevent controls attempt to stop risks from occurring in the first 

Detect controls are retrospective and identify risks once they have occurred 

Correct controls aim to reduce the impact of errors 

Direct controls guide behaviour towards a desired outcome

Input, process, output

Input controls concentrate on what goes into a process (e.g. sourcing materials at best price). 

Process controls focus on the process itself (e.g. minimum waste or idle time). 

Output controls assess whether outputs have met the required standards.

Outsourcing

Types of outsourcing:

• Ad hoc: sourcing a short-term skills gap by employing a contractor

• Project management: e.g. the installation of a new information system

• Partial: a number of services are outsourced (such as payroll or accounts payable)

• Total: a third party provides an entire service or functions to another, including premises, systems and staff.

Service level agreements (SLAs)

This is a contract between a service provider and a customer that defines the service to be provided and the level of performance to be expected. An SLA also describes how performance will be measured and approved, and what happens if performance levels are not met.