Internal control systems must be monitored periodically for their adequacy.

Question

Quizplus · Accepted Answer

Internal control systems are designed to ensure the reliability of financial reporting, compliance with laws and regulations, and the effectiveness and efficiency of operations. To ensure that these systems remain effective, they must be monitored periodically for their adequacy. This involves assessing the system's design and implementation, identifying weaknesses and areas for improvement, and taking corrective actions as necessary to address any deficiencies. Failure to monitor internal control systems can result in increased risk, decreased efficiency, and potential legal and financial consequences. Therefore, monitoring the adequacy of internal control systems is a critical part of ensuring the organization's overall success and sustainability.

Internal Control Systems Must Be Monitored Periodically for Their Adequacy