COSO'S INTERNAL CONTROL-INTEGRATED FRAMEWORK REPORT TO BE UPDATED

By Samantha Dudley, CPA, MBA - Manager

Financial reporting is heavily reliant on key internal controls being in place and operating effectively. In 1992 the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued the Internal Control-Integrated Framework to provide guidance on assessing and developing effective internal controls surrounding the areas of control environment, risk assessment, control activities, information and communication, and monitoring. COSO also issued the Internal Control over Financial Reporting–Guidance for Smaller Public Companies in 2006. The framework noted in both reports has been widely utilized by numerous organizations in the private and public sector.

A revised draft of the original 1992 report was released in December 2011 to address changes in the business environment over the past 20 years by providing additional clarification and examples building on the original concepts of the framework introduced in the first report. The comment period on the draft has already concluded and the final report is expected to be published in the beginning of 2013.

While the guidance in both reports noted above is identified as relating to public companies, the framework and concepts are common to all organizations. Practical applications of the framework could be easily adjusted for non-public companies. Once finalized, it would be a worthwhile exercise to review the updated report and compare it to current internal control practices to assist in identifying any opportunities to strengthen internal controls.

Additional information on the various reports and papers issued by COSO can be found at www.coso.org.