Yesterday, I had discussed about monitoring as one of the important components of the COSO framework. Today, I am discussing the two ways of monitoring usually used by companies while evaluating internal controls.

Ongoing Activities - Monitoring ongoing activities means monitoring the efficiency and effectiveness of internal controls in the normal course of business operations. Such ongoing monitoring might include management supervisory activities, reconcilations, routine checking activities etc. To take an example physical inventory is checked with the inventory as shown in the books of accounts is nothing but an ongoing monitoring activity.

Seperate Evaluations - Sometimes internal control evaluation is taken up as a seperate exercise by the management or the internal audit department for some critical areas. Such critical / high risk areas, are normally monitored more often to give management the requisite control comfort. These are referred to as Seperate Evaluations.

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Section 404 for Small Businesses , Section 404 Implementation Best Practices