According to the COSO framework, effective internal controls are composed of several key elements that ensure the reliability of financial reporting, compliance with laws and regulations, and the effectiveness and efficiency of operations.
* Documenting: While important, it is a part of the overall control activities and processes.
* Monitoring: This is a core component of the COSO framework, involving continuous assessment of the internal control system's performance.
* Management: This is involved in executing controls but is not itself a specific element of internal controls in the COSO framework.
* Auditing: This is an independent review of internal controls but is not listed as one of the primary components in the COSO framework.
Therefore, monitoring is an essential element of effective internal controls according to the COSO framework.
References:
* COSO Internal Control-Integrated Framework.
* Committee of Sponsoring Organizations of the Treadway Commission (COSO) guidelines.