Guidance on Monitoring Internal Control Systems (2009)

The COSO board recognizes that management's assessment of internal control often has been a time-consuming task that involves a significant amount of annual management and/or internal audit testing. Effective monitoring can help streamline the assessment process, but many organizations do not fully understand how to take full advantage of this important component of internal control. COSO’s Monitoring Guidance is designed to improve the use of monitoring by helping organizations:

1. Identify and maximize effective monitoring, and
2. Identify and improve ineffective or inefficient monitoring

In both instances, the internal control system may be improved, increasing the likelihood that organizational objectives will be achieved.

The culmination of two years of expert critical debate, the guidance brings together leading practices at large and small organizations and provides in-depth guidance for implementing the monitoring component of COSO's Internal Control—Integrated Framework

Guidance on Monitoring Internal Control Systems details:

COSO's Monitoring Guidance suggests that effective and efficient monitoring is best achieved by:

1. Establishing a foundation for monitoring, including a proper tone at the top, organizational structure and a baseline understanding of internal control effectiveness
2. Designing and executing monitoring procedures that seek to evaluate "persuasive" information about "key controls" addressing "meaningful risks" to organizational objectives
3. Assessing results and reporting them to appropriate parties

The guidance covers these and other topics in an easy-to–read, three-volume set.

The three-volume set includes:

• Volume I: Presents the fundamental principles of effective monitoring and develops the linkage to the COSO Framework
• Volume II: Presents in greater detail the principles outlined in Volume I and provides guidance to those responsible for implementing effective monitoring
• Volume III: Contains examples of effective monitoring

A free summary of the guidance and its intended purpose is posted on the "Excerpts" tab above.

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Other COSO documents:
Internal Control—Integrated Framework (1992)
Enterprise Risk Management—Integrated Framework (2004)
Internal Control over Financial Reporting—Guidance for Smaller Public Companies (2006)