Question

Vendor account reconciliations are performed by three clerks in the accounts payable department on Friday of each week. The accounts payable supervisor reviews the completed reconciliations the following Monday to ensure they have been completed. The work performed by the supervisor is an example of which COSO component?

(1) Control activities
(2) Information and communication
(3) Risk assessment
(4) Monitoring

Answer 1

The accounts payable supervisor’s review of vendor account reconciliations is an example of the Monitoring component of COSO, as it assesses the quality of internal controls.

Step-by-step explanation:

The work performed by the accounts payable supervisor is an example of a COSO component, specifically Monitoring. Monitoring is one of the five components of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Framework. It involves assessing the quality of an organization's internal control performance over time. The supervisor reviews the reconciliations to check for completeness and accuracy, which is a process to ensure that internal controls are functioning as intended. This practice helps in identifying any discrepancies that could signify errors or fraud.