INTERNAL CONTROL SYSTEM – components and principles

∙ Monitoring of controls
- a process to assess the quality of internal control performance over time.
- it involves assessing the design and operation of controls on a timely basis and taking
necessary corrective actions.
- Monitoring is done to ensure that controls continue to operate effectively. For example, if the
timeliness and accuracy of bank reconciliations are not monitored, personnel are likely to stop
preparing them. - Monitoring of controls is accomplished through ongoing monitoring
activities, separate evaluations, or a combination of the two.

There are two principles relating to Monitoring Activities:

1. The organization selects, develops, and performs ongoing and/or separate
evaluations to ascertain whether the components of internal control are present and
functioning.
2. The organization evaluates and communicates internal control deficiencies in a timely
manner to those parties responsible for taking corrective action, including senior
management and the board of directors, as appropriate.