1. A restaurant chain has over 680 restaurants. All food orders for each restaurant are required to be input into an electronic device which records all food orders by food servers and transmits the order to the kitchen for preparation. All food servers are responsible for collecting cash for all their orders and must turn in cash at the end of their shift equal to the sales value of food ordered for their I.D. number. The manager then reconciles the cash received for the day with the computerized record of food orders generated. All differences are investigated immediately by the restaurant. Corporate headquarters has established monitoring controls to determine when an individual restaurant might not be recording all its revenue and transmitting the applicable cash to the corporate headquarters. Which one of the following woule be the best example of a monitoring control?

A.The restaurant manager reconciles the cash received with the food orders recorded on the computer.

B.All food orders must be entered on the computer, and segregation of duties is maintained between the food servers and the cooks.

C.Management prepares a detailed analysis of gross margin per store and investigates any store that shows a significantly lower gross margin.

D.Cash is transmitted to corporate headquarters on a daily basis.

C yes. Monitoring is a process that assesses the quality of internal control over time. It involves assessment by appropriate personnel of the design and operation of controls and the taking of corrective action. Monitoring can be done through ongoing activities or separate evaluations. Ongoing monitoring procedures are built into the normal recurring activities of an entity and include regular management and supervisory activities. Thus, analysis of gross margin data and investigation of significant deviations is a monitoring process.

A no. The manager’s activity is an example of a reconciliation control applied at the store level. Monitoring is an overall control that determines. Whether other controls are operating effectively.

B no. the division of duties is an operational control.

D no. daily transmission of cash is an operational control.