Archive for May, 2013

COSO introduces updated Internal Control Framework

Many in the Internal Audit Community would be aware that COSO (the Committee of Sponsoring Organizations of the Treadway Commission) released an updated Internal Control Framework on May 14, 2013.

The COSO Framework initially introduced in 1992 and possibly the most widely accepted internal control framework has been enhanced by expanding the financial reporting category of objectives to include other important forms of reporting, such as non-financial and internal reporting.
The business environment has witnessed significant changes since the original framework was released and the Board felt it was time to align the framework to the emerging landscape and stakeholder expectations including:

  • Expectations for governance oversight
  • Globalization of markets and operations
  • Changes and greater complexities of business
  • Demands and complexities in laws, rules, regulations, and standards
  • Expectations for competencies and accountabilities
  • Use of, and reliance on, evolving technologies
  • Expectations relating to preventing and detecting fraud

The framework solidifies some of concepts mentioned in the previous versions as specific principles to assist management to implement a sound internal control framework.

What should companies do?

Senior Management should work closely with their internal audit groups to:

  •  Review the updated COSO Framework and evaluate how it impacts their internal control structures and procedures for each of the COSO components and principles. If the company had adopted the original framework management would need to focus their attention on the key changes
  •  Apprise their Audit Committee on any impact to their organizations and how the internal controls will be changed or enhanced as a result of the new guidance.
  •  Consider adopting the changes within their internal control system as soon as feasible.

May 24, 2013 at 8:39 pm Leave a comment

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