COSO

COSO is the corporation of sponsoring organization of the Treadway Commission. COSO performed the seminal study on fraudulent financial reporting and made a number of recommendations similar to those enacted in the Sarbanes-Oxley Act of 2002.   In 1992, COSO issued internal Control, integrated Framework, which serves as the primary criterion for evaluating the quality of a company’s internal control system. In 2006, COSO provided additional guidance on implementing internal controls that articulates the basic principles of internal control. COSO continues to publish guidance to assist companies and their auditors in implementing and evaluating internal control and effective enterprise risk management processes.

 In detail About COSO

COSO is a voluntary organization which was founded in the year 1985 to sponsor the National Commission on Fraudulent Reporting. Its mandate is to improve the quality of the financial reporting through business ethics, effective internal control and corporative governance; it does so by studying the factors which lead to fraudulent reporting and developing recommendations to combat it. COSO is backed by the American Accounting Association, American Institute of Public Accountants, the Financial Executives Institutes, the Institute of Internal Auditors, and the National Association of Accountants (now the Institute of Management Accountants). The original chair of the National Commission was James C. Treadway; hence its popular name, the “Treadway Commission”. The current chairman is John Flaherty, the retired vice president of and general auditor for PepsiCo Inc.

COSO authored Internal Control-Integrated Framework, which set out a model for establishing and then evaluating internal control systems. Control activities are centered on financial applications to protect integrality, confidentiality and availability, but they go beyond finance to address systems in all departments of an organization. This model is well respected and widely used, and has been loosely adopted by the SEC as an appropriate model for developing and evaluating internal control for Sarbanes-Oxley purposes.

Questionnaire:

• What is COSO?
• What are the objectives of COSO?