Question

Which of the following statements about the 2013 COSO IC component Monitoring is true?

Select one:

a. The scope of monitoring should be dictated by how managers assess the risk of an internal control not functioning as designed

b. Guidance on Monitoring Internal Control Systems (GMICS) suggests that the internal audit department should be in charge of reviewing internal controls every year

c. The design and operation of controls should be overseen preferably by top-level managers

d. Effective monitoring is a high-level, comprehensive review that is both risk-based and principles-based

Answer 1

Solution: Effective monitoring is a high-level, comprehensive review that is both risk-based and principles-based

Explanation: Monitoring is categorised to be principles based as well as risk based. It includes the five components of internal control. It is a top-level, comprehensive review of the firm-wide goals and risks. In 2013 COSO Report managers were required to outline on the 5 components i.e. the control environment, assessment of risk, activities on control, effective communication, and monitoring, that must include the 17 principles