Question

Monitoring is a major component of the COSO Internal Control— Integrated Framework. Which of the following is not correct in how the company can implement the monitoring component?

a. Monitoring can be an ongoing process.
b. Monitoring can be conducted as a separate evaluation.
c. Monitoring and other audit work conducted by internal audit staff can reduce external audit costs.
d. The independent auditor can serve as part of the entity's control environment and continuous monitoring.

Answer 1

The incorrect statement about COSO Internal Control monitoring is that the independent auditor can be part of the entity's control environment and continuous monitoring.

Step-by-step explanation:

A student asked which statement about implementing the monitoring component of the COSO Internal Control—Integrated Framework is incorrect. The correct options highlight that monitoring can be ongoing, and conducted as a separate evaluation, and the internal audit work can potentially reduce external audit costs. However, the incorrect statement is that 'The independent auditor can serve as part of the entity's control environment and continuous monitoring.' Independent auditors are external to the company and do not form part of the entity's internal control environment; instead, their primary role is to provide an independent assessment of the financial statements and internal controls.