Observes stone crumbling (5)
I believe the answer is:
notes
'observes' is the definition.
('note' can be a synonym of 'observe')
'stone crumbling' is the wordplay.
'crumbling' is an anagram indicator.
'stone' is an anagram of 'NOTES'.
(Other definitions for notes that I've seen before include "fivers?" , "Doh, re, mi, ..." , "Brief written records" , "Cash" , "Marks on a stave" .)