"Committee of Sponsoring Organizations of the Treadway Commission (COSO) Strengthens Internal Controls over Financial Reporting – Yay or Nay?"
Committee of Sponsoring Organizations of the Treadway Commission (COSO) has created a model for evaluating internal controls of an entity. This model has been adopted world wide as the generally accepted framework for internal control and is widely recognized as a standard against which an entity can measure the effectiveness of their systems of internal control.
For understanding whether COSO strengthens Internal Controls over Financial Reporting or not, we have to first understand Internal Controls as per COSO framework.
As per COSO, Internal control is a set of policies, procedures, rules and guidelines prepared and implemented by an entity’s board of directors, management and other personnel to provide reasonable assurance of the achievement of objectives of the stakeholders. In this regards, there are five things which are broadly covered by this:-
a. Effectiveness and efficiency of operations
b. Reliability of financial reporting
c. Compliance with applicable laws and regulations
d. Fraud Prevention
e. Safety of Fixed Assets
Now, if we further delve into point "b" i.e. "Reliability of Financial Reporting" , it means COSO provides framework so that users of financial statement can rely on the financial statement prepared by the management & audited by the auditors of the entity. Hence, it can be said that COSO provides guidelines for Internal control over financial reporting, so in a way COSO strengthens ICFR theoretically.
To me, independent & unbiased execution of internal controls are more important for ICFR than listing of guidelines enumerated by COSO framework or for that sake any other model.
In the end, i would like to conclude by saying that COSO framework provides theoretically strengthen ICFR or Internal controls for that matter. But, the real importance lies in execution of guidelines enumerated by COSO framework.
"Committee of Sponsoring Organizations of the Treadway Commission (COSO) Strengthens Internal Controls over Financial Reporting –...
"Committee of Sponsoring Organizations of the Treadway Commission (COSO) Strengthens Internal Controls over Financial Reporting – Yay or Nay?" Support or critique the idea that the Committee of Sponsoring Organizations of the Treadway Commission (COSO) transition would strengthen internal controls over financial reporting in publicly traded companies. Provide your rationale.
Support or critique the idea that the Committee of Sponsoring Organizations of the Treadway Commission (COSO) transition would strengthen internal controls over financial reporting in publicly traded companies. Provide your rationale. ACC562
Should management assessment of internal control over financial reporting consider all of COSO components Are could it be based only on the controls over the processing of transactions?
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