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CGFM Exam 3 highlights internal control evaluation using COSO and GAO Green Book frameworks. In this scenario, auditors are performing an independent review of payroll to ensure controls are working as intended. This is a monitoring activity—evaluating the effectiveness of controls over time and detecting breakdowns. Control environment (Option A) relates to tone at the top, ethics, and organizational structure. Risk assessment (Option B) involves identifying risks such as payroll fraud and designing controls to mitigate them. Control activities (Option C) are the procedures implemented (e.g., segregation of duties, reconciliations) to prevent ghost employees from being added in the first place. Monitoring (Option D) goes a step further: it tests and evaluates whether those control activities are functioning properly. Regular audit testing is a classic form of monitoring, allowing management to detect problems early and take corrective action. Therefore, Option D is the best answer as it directly reflects the monitoring component.