Briefly explain the meaning of the statement, ‘unmonitored controls tend to deteriorate over time’. 

‘Unmonitored controls tend to deteriorate over time’

This statement refers to the need to establish which controls need to be monitored to support a sound system of internal controls and how to monitor those controls. 

Once a control system is designed and responsibilities for its management allocated, only those targets and controls that are made a part of someone’s job or performance measurement will be monitored and thereby maintained. Any metrics that are not a part of this control regime will go unchecked and may not remain within compliance limits as circumstances change over time. 

The main roles of internal audit are to provide information to management on the relevance and effectiveness of internal control systems and to provide the evidence to demonstrate why those controls are effective or not. This requires the identification of which controls to monitor and developing effective ways of monitoring those controls.

The complexity of the control regime is also relevant. There is a balance between having a sufficient number of controls in place and having too many. In this context, ‘too many’ means that control systems must be actually useable. Over-complex controls are likely to deteriorate over time if their monitoring is not possible within reasonable cost limits and this could also cause operational inefficiencies.

Furthermore, an organisation is not static and so different controls will be needed over time. As activities change as a result of changes in organisational strategy, the controls that need to be monitored change and the tolerances of those controls may also change (they may become tighter or looser). Constant updating of controls is therefore necessary, especially in frequently changing business environments.