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CMA Intermediate · Corporate Accounting and Auditing · Report on Internal Financial Control over Financial Reporting

Which of the following best describes the 'monitoring' component of internal control in the context of internal financial controls over financial reporting?

Monitoring is the process of assessing the performance of internal control over time, using ongoing supervisory activities and separate evaluations such as internal audit reviews. Authorisation is a control activity, risk identification is risk assessment, and circulating policy manuals belongs to information and communication.

  1. AAssessing the performance of internal control over time, through ongoing activities and separate evaluationsCorrect
  2. BAuthorising transactions before they are recorded in the books
  3. CIdentifying and analysing risks to the achievement of financial reporting objectives
  4. DCommunicating the accounting policies to employees through manuals

Explanation

Monitoring means assessing the quality of control performance over time, through ongoing supervisory activities, internal audit and separate evaluations. Authorisation is a control activity, risk identification is risk assessment, and communicating policies falls under information and communication.

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