Monitoring
Monitoring is the assessment of internal control performance over time. It is accomplished by ongoing monitoring activities and by separate evaluations of internal control, such as self-assessments, peer reviews, and internal audits. The purpose of monitoring is to determine whether internal controls are adequately designed, properly executed, and effective. Internal control is adequately designed and properly executed if all five internal control components are present and functioning as designed. Internal control is effective if the Corporation Members and management have reasonable assurance that:
- They understand the extent to which operation objectives are being achieved.
- Published financial statements are being prepared reliably.
- Applicable laws and regulations are being complied with.
While internal control is a process, its effectiveness is a state of condition of the process at one or more points in time.
Just as control activities help to ensure that actions to manage risks are carried out, monitoring helps to ensure that control activities and other planned actions to effect internal control are carried out properly and in a timely manner and that the end result is effective internal control. Ongoing monitoring activities include various management and supervisory activities which either validate or invalidate the design, execution, and effectiveness of internal control. Separate evaluations, on the other hand, such as self-assessments and internal audits, are periodic evaluations of internal control components resulting in a formal report on internal control. Self-assessments are performed by department employees; internal audits are performed by internal auditors who provide an independent appraisal of internal control.
Last Updated: November 17, 2008 (vm).
