COSO to Update Internal Control Framework
Category: Articles
1/13/12
By: Katie Smith
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has proposed an update to the current 20 year old framework on internal control. Currently, there are five components of the framework – control environment, risk assessment, control activities, information and communication, and monitoring. The five components will not be changing; however, there are 17 principles which have been proposed to update these components.
COSO’s mission is to improve organizational performance oversight and reduce fraud through development of comprehensive frameworks and guidance on internal control, enterprise risk management and fraud deterrence.
The concept behind the update is to clarify the requirements for an effective system of internal control as well as helping companies to design and operate proper procedures. COSO would like the principles to be adopted as they are considered to be timeless. With many changes in today’s business environment, many due to improvement of technology, the principles will provide a generalization on how to apply these changes in a company’s operations to the internal control model.
The update will also include use of real-life examples, which will allow companies and users to scale the framework to fit their organization, whether public, private, profit, or non-profit. Also companies will be able to more effectively use the framework to either develop or improve their current internal control structure in support of the long-term business goals.
COSO is currently accepting comments on the exposure draft through March 31, 2012 at http://www.coso.org . The final framework is scheduled to be released in the fall of 2012. We will keep you informed as updates are available.