Question

Which of the following factors would best describe the “MONITORING” component of the COSO framework?

A. The extent to which a reconciliation relies on the IT system.

B. Management’ approach to correcting known significant deficiencies on a timely basis.

C. The company’s way of transferring information from the transaction processing system to the general ledger.

D. The extent that duties are divided among different people to reduce the risk of error or fraud.

Answer 1

B. Management’ approach to correcting known significant deficiencies on a timely basis.

Reason-

Monitoring activities are ongoing evaluations, separate evaluations, or some combination of the two are used to ascertain whether each of the five components of internal control, including controls to effect the principles within each component, is present and functioning.

Management approach to correct deficiencies would ensure the effective ness of other components of internal control.