A Critical Element of Control Is Monitoring

question 26

Multiple Choice

A critical element of control is monitoring. What is likely to happen if management fails to monitor an internal control?

• A) Necessary improvements will not be identified.
• B) Personnel are likely to stop observing the control.
• C) The inherent risk of an error will increase.
• D) The auditor is likely to assume the control is working when it might not be.

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Definitions:

Effective Date

The date on which something, such as a law, agreement, or policy, becomes officially operational or enforceable.

Corporate Insurance

A type of insurance coverage designed to protect corporations from financial losses due to events such as property damage, liability claims, and employee-related risks.

Liability Insurance

Insurance protection that offers defense against claims related to harm or damage inflicted on other individuals or their property.

Property Damage

Harm or destruction that affects the value or usability of someone's property.