Question

one of the components of internal control is monitoring, what does this involve within an organization?

what is COSO and why is it important?

Answer 1

Answer 1) The monitoring is one of the components of Internal Control which involves the evaluations of the activities – Ongoing, Separate and a combination of both Ongoing & Separate in order to ascertain that the all five components of the internal control exists and carried out across the organization. These activities are: A) Working environment control, B) Risk assessment & its control C) Controlling the functional activities, D) Information and communication control, E) Monitoring the internal controls. The monitoring confirms that the Control system is effectively placed and regularly followed in the organization.

Answer 2) COSO is a committee which is composed of five structural organizations ie. (a) American Accounting Association, (b) Financial Executives International, (c) American Institute of Certified Public Accountants, (d) Institute of Internal Auditors, (e) Institute of Management Accountants. The board of COSO lays down documents and guide the organizations to overcome the problems regarding the risk management, internal controls and prevention of fraud.

The COSO framework describes and explains that the advantages of the internal control and fraud prevention system should be achieved by regular implementation of the monitoring.

The COSO is important as it

i) Allows the organization to focus on their operations and compliance of the ethical and responsibilities objectives.

ii) The committee creates a process of an on-going practical implementation of the policies and procedures for effective Internal Control.

iii) The management control is being strengthened through COSO implementation of framework.

iv) The organization can implement the COSO framework in each and every part of the company.

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