Internal Control Monitoring Purpose and Terminology

Question 1

Why monitor controls?

Answer 1

Over time controls deteriorate; technology improvements; changes in management techniques; people quit

Question 2

What are evaluators

Answer 2

Monitor internal control

Question 3

What are the 2 primary attributes of evaluators?

Answer 3

Competence and objectivity

Question 4

Levels of monitoring (3)

Answer 4

Board monitoring - Monitoring by board, committees, or others charged with overseeing management conductt

Self-assessment -

Self-review - Review of one’s own work; least objective

Question 5

Nature or Quality of Control (6)

Answer 5

1) Control objectives - specific targets against which the effectiveness of internal control is evaluated
2) Compensating control - Controls that accomplish same objective as another control
3) Deficiency or internal control deficiency - A condition within an internal control system requiring attention
4) Key controls - Controls that are most important to monitor or support a conclusion
5) Key performance indicators - Metrics that reflect critical success factors
6) Key risk indicators (KRI) - Forward-looking metrics that seek to identify potential problems, thus enabling an organization to take timely action