Assessing control effectiveness

1. Regulatory Concept & Core Standards

This video's topic is assessing control effectiveness. By the end, you should be able to test whether a control reduces its intended risk. We will connect the information available, the criterion guiding the decision and the action that must be recorded. Follow the case and compare your answer with the proposed response. After approving the PPR, the entity needs to establish whether measures were applied and achieved their intended effect. This course moves from planning to implementation records, reports and review. Adapt example indicators to the entity.

A control may exist and operate without being effective. Effectiveness depends on preventing, detecting or correcting the relevant event. A second signature adds little if the approver performs no review. Test both design and operation. No detected incidents is insufficient proof of effectiveness.

National rule: Assessment of the PPR should consider implementation of the measures and any need for corrective action. The effectiveness tests presented here are good monitoring practices. The absence of reports or detected incidents does not, by itself, demonstrate programme effectiveness.

2. Practical Implementation & Procedure

Define the expected result and select cases to test. Check whether the performer had information, independence and time. Examine exceptions and responses. Record what the test establishes and what remains unassessed. Failure may require redesign, training or stronger supervision. Before moving on, turn this procedure into a sequence you could explain to a colleague. Identify the first check, the action that depends on its outcome and the record that allows the decision to be reconstructed. Follow the sequence on screen and identify the point where an error would change the result.

3. Case Study & Compliance Action

Every bank-detail change has two signatures, but one person supplies both using shared accounts. The record suggests separation of duties without the required independence. The team revises access and approval arrangements. Now read the case carefully. Separate established facts from information you would still need to confirm. Do not add motives or events that have not been described. This distinction matters when choosing a response proportionate to the information available.

The exercise is as follows: Is counting signatures enough to establish independent review? Choose an answer and write one sentence explaining it. During the pause, compare your choice with the criteria we have just considered. Also think about the material you would retain to explain the decision later.

No. Check who approved, what they assessed and their independence. Formal evidence may conceal an operational failure. Test the control's purpose, not merely field completion.

One mistake to avoid is: confusing a system mark with an actual assessment.

Which document, responsible person and evidence from your entity demonstrate application of this rule?

Confirm the scope and applicable source. Record the decision, who can approve it and the evidence required. Application in this lesson should support the following objective: test whether a control reduces its intended risk Distinguish the legal duty from the organisational method chosen by the entity.