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What are monitoring controls?

  • 07-08-2008 8:42pm
    #1
    Newcarneeded
    Closed Accounts Posts: 81 ✭✭


    What is a monitoring control?

    Are monitoring controls, controls that management employ which are more relevant to managing the business and focused on preventing loss of assets like cash, and monitoring business performance, rather than controls aimed at preventing a misstatement in the financial statements?

    I'm looking at ACA FAE 2004 Q3 and part b asks what monitoring controls should be employed.

    The context of the Q is a car park where operators prepare manual calculations of charges to customers and so company revenue.

    The answer mentions reconciling the daily cash files prepared by the car park attendants to the daily total which is then banked, (so detecting any cash that goes missing) spot checks of the operators in action at the car park should be put in place (presumably with a view to catching them not recording cash received) and monthly management accounts should be compared to budget. Variances should be investigated.

    The examiners comments noted that students didn't understand monitoring controls and I can't find a definition of monitoring controls in the ISA's.


Comments

  • #2
    the1andonly1
    Registered Users, Registered Users 2 Posts: 224 ✭✭the1andonly1


    Is it something to do with the COSO control framework? This is an approach taken to controls testing post SOx in the US - check out the link. There are 5 steps in the COSO approach to auditing controls, and "monitoring controls" is one of them

    http://www.coso.org/audit_shop.htm


  • #3
    Newcarneeded
    Closed Accounts Posts: 81 ✭✭Newcarneeded


    I don't think so.

    The ISA talks about monitoring of controls, which is basically periodically testing your controls to ensure that they're operating effectively, wheras i think monitoring controls is more along the lines of looking at key performance indicators.

    Thanks for the post anyway though.


  • #4
    daraghmack
    Registered Users Posts: 78 ✭✭daraghmack


    Yeah the solution to that question is pretty straightforward. They are just controls that could be put in place to monitor the cashiers to ensure that they are not pocketing money, or letting people park for free or overcharging etc. If you wanted to link it to the financial statements its prob a control over revenue and its completeness. That's my take on it anyway!!
    I'll be bloody glad when it is this day nxt week, best of luck by the way!


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