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ELS session

    Raymond J Elson
    Use Personal Experience to Teach COSO Concepts and Practice...
    ELS session posted July 30, 2010 by Raymond J Elson, last edited April 16, 2012 
    1365 Views, 8 Comments
    title:
    Use Personal Experience to Teach COSO Concepts and Practice Documentation Techniques
    names(s), affiliation(s):
    Susanne O'Callaghan, Pace University, Raymond J Elson, Valdosta State University; John P. Walker, CUNY/Queens College
    date:
    August 2, 2010 6:00pm - 7:30pm
    file:
    COSO.pdf (1.4MB)

    Comment

     

    • Robert E Jensen

      Question
      What do international standards (IFRS) and COSO’s New Internal-Control Guidance sadly have in common?

      Answer
      Lack of real world examples and varied-circumstance implementation guides

      "What’s Missing from COSO’s New Internal-Control Guidance: The proposal lacks real-world examples. CFOs will need to fill in the blanks," by Kristine Brands, CFO.com, March 20, 2012 --- Click Here
      http://www3.cfo.com/article/2012/3/risk-management_coso-internal-control-guidance?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+cfo%2Fdaily_briefing+%28Latest+Articles+from+CFO.com%29

    • Robert E Jensen

      AICPA seeks some changes to COSO’s updated framework proposal ---
      http://journalofaccountancy.com/Web/20125441.htm

      Question
      What is COSO?

      Answer --- http://www.coso.org/ 

      COSO is a voluntary private sector organization dedicated to improving the quality of financial reporting through business ethics, effective internal controls, and corporate governance. COSO was originally formed in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, an independent private sector initiative which studied the causal factors that can lead to fraudulent financial reporting and developed recommendations for public companies and their independent auditors, for the SEC and other regulators, and for educational institutions.

      The National Commission was jointly sponsored by the five major financial professional associations in the United States, the American Accounting Association, the American Institute of Certified Public Accountants, the Financial Executives Institute, the Institute of Internal Auditors, and the National Association of Accountants (now the Institute of Management Accountants). The Commission was wholly independent of each of the sponsoring organizations, and contained representatives from industry, public accounting, investment firms, and the New York Stock Exchange.

      The Chairman of the National Commission was James C. Treadway, Jr., Executive Vice President and General Counsel, Paine Webber Incorporated and a former Commissioner of the U.S. Securities and Exchange Commission. (Hence, the popular name "Treadway Commission"). Currently, the COSO Chairman is John Flaherty, Chairman, Retired Vice President and General Auditor for PepsiCo Inc.

      Bob Jensen's threads on professionalism and independence ---
      http://www.trinity.edu/rjensen/Fraud001c.htm

    • Robert E Jensen

      "WHAT DOES COSO STAND FOR?" by Anthony H. Catanach and J.Edward Ketz, Grumpy Old Accountants Blog, April 16, 2012 ---
      http://blogs.smeal.psu.edu/grumpyoldaccountants/archives/572

      Jensen Comment
      Sometimes COSO means "Change One Side Only"
      But in Spanish it means a place for Bull Fights
      The latter definition seems to fit better.

      Oh all right!
       

      Question
      What is COSO?

      Answer --- http://www.coso.org/ 

      COSO is a voluntary private sector organization dedicated to improving the quality of financial reporting through business ethics, effective internal controls, and corporate governance. COSO was originally formed in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, an independent private sector initiative which studied the causal factors that can lead to fraudulent financial reporting and developed recommendations for public companies and their independent auditors, for the SEC and other regulators, and for educational institutions.

      The National Commission was jointly sponsored by the five major financial professional associations in the United States, the American Accounting Association, the American Institute of Certified Public Accountants, the Financial Executives Institute, the Institute of Internal Auditors, and the National Association of Accountants (now the Institute of Management Accountants). The Commission was wholly independent of each of the sponsoring organizations, and contained representatives from industry, public accounting, investment firms, and the New York Stock Exchange.

      The Chairman of the National Commission was James C. Treadway, Jr., Executive Vice President and General Counsel, Paine Webber Incorporated and a former Commissioner of the U.S. Securities and Exchange Commission. (Hence, the popular name "Treadway Commission"). Currently, the COSO Chairman is John Flaherty, Chairman, Retired Vice President and General Auditor for PepsiCo Inc.

      AICPA seeks some changes to COSO’s updated framework proposal ---
      http://journalofaccountancy.com/Web/20125441.htm

      Bob Jensen's threads on COSO are at
      http://www.trinity.edu/rjensen/Fraud001c.htm
      Search for COSO at the above ling

    • Robert E Jensen

      COSO:  Committee on Sponsoring Organizations of the Treadway Commission in 2012 ---
      http://www.coso.org/

      October 26, 2012

      New ERM Thought Paper Details Latest Thinking on Risk Assessment

      Recognizing the evolving nature of enterprise risk management (ERM) in recent years, COSO has released a new thought paper authored by representatives from Deloitte titled Risk Assessment in Practice. The paper provides the latest thinking on risk assessment approaches and techniques that have emerged as the most useful and sustainable for decision-making.  It represents another in a series of papers published by COSO aimed at helping organizations move up the maturity curve in their ongoing development of a robust ERM program.


      Read the COSO thought paper, Assessment in Practice.
      Read the full press release.

      September 18, 2012

      COSO Releases for Comment Internal Control Over External Financial Reporting

      COSO has released for public comment an exposure draft of its Internal Control over External Financial Reporting (ICEFR): Compendium of Approaches and Examples. This Compendium, part of COSO’s overall project to update its Internal Control–Integrated Framework (Framework), has been developed to assist users when applying the Framework to external financial reporting objectives. COSO is also making available an updated version of the Framework, revised to give effect to comments received in the earlier public exposure, as well as proposed Illustrative Tools to assist in assessing effectiveness. COSO welcomes comments on all three of these documents.

       

      Read the Press Release
      View Exposure Draft and Provide Comments
      Read FAQ
      Download PowerPoint Presentation

      June 20, 2012

      Managing Risks of Cloud Computing the Focus of COSO’s Latest Thought Leadership

      In response to the growing number of organizations utilizing cloud computing as a viable alternative for meeting their technology needs, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) has published a new thought paper titled Enterprise Risk Management for Cloud Computing. The thought paper provides guidance on following the principles of the COSO Enterprise Risk Management (ERM) – Integrated Framework to assess and mitigate the risks arising from cloud computing.

      Download the thought paper
      Read the full press release.

      April 30 , 2012

      COSO Expects to Issue the Updated Internal Control-Integrated Framework and Related Supporting Documents During the First Quarter of 2013.
       

      The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has announced that the updated Internal Control–Integrated Framework (ICIF or Framework) is expected to be released during the first quarter of 2013. The final Framework is expected to enable organizations to adapt to increasing complexity and pace of change; to mitigate risks to the achievement of objectives; and to provide reliable information to support sound decision making.

      View press release.

      April 2 , 2012

      COSO Develops Draft Update to Internal Control - Integrated Framework. Public Comment Period Now Closed.


       

      In December, COSO released – for public comment – a draft update to the 1992 Internal Control – Integrated Framework (Framework) intended to help organizations improve performance with greater agility, confidence and clarity. The public comment period ended on March 31, and the final updated Framework is slated to be released in early 2013.

      View the Initial ICFR Draft Update
      View the Public Comments
      Read Frequently Asked Questions
      Download PowerPoint Presentation
      Read Initial Press Release Published December 19, 2011

      Visit the exposure draft Website for more information: www.ic.coso.org
       

      March 1 , 2012
       

      COSO Releases Thought Paper on Enhancing Board Oversight by Avoiding and Challenging Traps and Biases in Professional Judgement

       

      COSO has released Enhancing Board Oversight: Avoiding Judgment Traps and Biases, a thought-paper detailing a five-step judgment process that board members and others can use to overcome common pitfalls and mitigate the effects of judgment bias. The judgment process is based on KPMG’s Professional Judgment Framework, which enables individuals to identify where and when the quality of judgments tends to be threatened by predictable, systematic judgment traps and biases.

      View thought paper.
      View press release.

      January 20, 2012
       

      Enterprise Risk Management - Understanding and Communicating Risk Appetite


       

      Organizations encounter risk every day as they pursue their objectives. Risk appetite — the amount of risk organizations are willing to accept in pursuit of their objectives — is an integral part of an effective ERM system. This thought paper aims to help organizations develop, better articulate, and implement “risk appetite.” It provides examples of statements of risk appetite and emphasizes the notion that risk appetite should be clearly defined, communicated by management, embraced by the board, and continually monitored and updated.

      View Thought Paper
      Read Press Release

      Risk Analysis in Accounting Theory ---
      http://www.trinity.edu/rjensen/Theory01.htm

      Ratios for Return, Valuation, and Risk Analysis ---
      http://www.trinity.edu/rjensen/roi.htm

      Free Tutorials on Accounting for Derivative Financial Instruments and Hedging Activities ---
      http://www.trinity.edu/rjensen/caseans/000index.htm

    • Robert E Jensen

      Committee of Sponsoring Organizations of the Treadway Commission (COSO) ---
      http://en.wikipedia.org/wiki/Committee_of_Sponsoring_Organizations_of_the_Treadway_Commission

      What's New with COSO?

      May 14, 2013

      2013 Internal Control-Integrated Framework Released

      COSO has issued the 2013 Internal Control–Integrated Framework (Framework). The Framework published in 1992 is recognized as the leading guidance for designing, implementing and conducting internal control and assessing its effectiveness. The 2013 Framework is expected to help organizations design and implement internal control in light of many changes in business and operating environments since the issuance of the original Framework, broaden the application of internal control in addressing operations and reporting objectives, and clarify the requirements for determining what constitutes effective internal control.

      COSO has also issued Illustrative Tools for Assessing Effectiveness of a System of Internal Control and the Internal Control over External Financial Reporting (ICEFR): A Compendium of Approaches and Examples. The Illustrative Tools are expected to assist users when assessing whether a system of internal control meets the requirements set forth in the updated Framework. The ICEFR Compendium is particularly relevant to those who prepare financial statements for external purposes based upon requirements set forth in the updated Framework.

      Read Press Release
      Download Executive Summary
      Read FAQs
      Download PowerPoint Slides
      Purchase Framework and Tools

      Bob Jensen's threads on managerial accounting ---
      http://www.trinity.edu/rjensen/Theory02.htm#ManagementAccounting

    • Robert E Jensen

      From The Wall Street Journal Accounting Weekly Review on July 26, 2013

      Firms Fortify Fraud Defenses
      by: Emily Chasan
      Jul 23, 2013
      Click here to view the full article on WSJ.com
       

      TOPICS: Accounting Information Systems, Auditing, Internal Controls

      SUMMARY: The Committee of Sponsoring Organizations (COSO) has updated its Internal Control:Integrated Framework (Framework). The Framework had not been updated since 1992; the changes address inernal controls needed in today's business environment over such activities as cloud computing and outsourcing. The Securities and Exchange Commission has updated it vigilance in citing companies for internal control lapses and the Public Company Accounting Oversight Board has been finding that audit firms have failed to obtain sufficient evidence to offer an opinion on internal controls in 15% of its reviews.

      CLASSROOM APPLICATION: The article may be used in an auditing or information systems class.

      QUESTIONS: 
      1. (Introductory) What is the Committee of Sponsoring Organizations (COSO)? What document has this organization recently updated?

      2. (Advanced) How long do companies have to implement the new procedures in this document? What problems could arise for companies who do not improve internal controls in the next year?

      3. (Advanced) What steps has the U.S. Securities and Exchange Commission (SEC) taken in recent years in relation to internal controls at publicly-traded companies? Why do you think the SEC is interested in the management topic of internal controls?

      4. (Advanced) What is the Public Company Accounting Oversight Board (PCAOB)? What have been its recent findings about auditors' performance in testing internal control systems? What PCAOB procedures uncover these testing failures?

      5. (Advanced) Internal control procedures at Campbell Soup. Co. are described at the end of the article. One procedure mentioned is reconciling accounts. How do account reconciliations serve as internal control procedures?
       

      Reviewed By: Judy Beckman, University of Rhode Island
       

      RELATED ARTICLES: 
      The Big Number: 5,459
      by Emily Chasan
      Jul 23, 2013
      Page: B8

      "Firms Fortify Fraud Defenses," by Emily Chasan, The Wall Street Journal, July 23, 2013 ---
      http://online.wsj.com/article/SB20001424127887324263404578616363792687152.html?mod=djem_jiewr_AC_domainid

      Thousands of companies world-wide are planning to update systems and policies that act as their first line of defense against fraud and other hidden risks, following a sweeping overhaul of the most widely used guidelines for those safeguards.

      The new guidelines, which many companies expect to adopt by the end of next year, are for so-called internal controls, which the government has required U.S. public companies to have in place for the past decade, as part of an effort to protect investors.

      Companies might, for example, establish procedures to make sure that only employees responsible for certain types of inventory can access it, or require a particular method for inputting purchase orders. Having these systems helps companies monitor the transactions for errors, impropriety or fraud.

      Until now, internal controls have been based on a 20-year-old framework that didn't take into account the new risks posed by mobile technology and cloud computing, as well as the rise of outsourcing and shifts in corporate governance.

      Such controls haven't always been high on the corporate agenda. Lack of them has been blamed for past accounting scandals at big companies like Tyco International TYC -1.59% and Satyam Computer Services Ltd. 500376.BY +1.92%

      Large companies spend upward of $1 million a year on internal-controls systems, according to consulting firm Protiviti, but some investors consider it money well spent.

      "It's usually a lapse of internal controls that results in a loss," said Anne Sheehan, director of corporate governance at the California State Teachers' Retirement System, the nation's second-largest public pension fund.

      Ms. Sheehan said she has recently focused on controls used by pharmaceutical companies in testing new drugs submitted to regulators for marketing approval and on potential supply-chain risks at retailers in the wake of a building collapse in Bangladesh that killed more than 1,000 garment workers.

      "We want to make sure the [company's] board is aware of the risks and holds management to task, so that shareholder value is not diminished through some catastrophe," she added.

      The effort to develop effective internal controls dates back decades. The updated guidelines, released in May, come from a group of five accounting associations known as the Committee of Sponsoring Organizations of the Treadway Commission. It is the offspring of a national commission on fraudulent financial reporting in the 1980s led by then-Securities and Exchange Commissioner James C. Treadway Jr.

      The group published its first guidelines in 1992, but they were little used until the Sarbanes-Oxley Act of 2002 essentially forced most U.S. public companies to adopt them.

      The new guidelines officially replace the existing ones in December 2014. Although companies face no penalty if they don't embrace them, ignoring them could put off investors who value tight management.

      The new framework recommends that internal-control processes adhere to 17 principles, such as the independence of corporate boards from management and the need to address risks posed by technology.

      "Every company will be going through the processes they have and asking, 'Do I have the right controls?'" said Carolyn Saint, vice president of internal audit for convenience-store operator 7-Eleven Inc.

      "We're making sure the things we've aligned to as company controls—like security, access, change management—are up to date, and whether there is anything in the new standard we need to reflect," she said.

      The overhaul comes as internal controls are getting a tougher look from regulators. The Public Company Accounting Oversight Board has increasingly rebuked auditors for failing to properly evaluate corporate controls.

      In its most recent inspections, the government's audit watchdog found auditors failed to get enough evidence to sign off on a company's internal controls about 15% of the time.

      The number of SEC enforcement actions citing internal-controls violations is up about 40% from this time last year. The agency also launched a task force this year that aims to focus on detecting corporate frauds earlier.

      The SEC declined to comment.

      Continued in article

      Bob Jensen's threads on professionalism and internal control ---
      http://www.trinity.edu/rjensen/Fraud001c.htm

    • Robert E Jensen

      Committee of Sponsoring Organizations of the Treadway Commission (COSO) ---
      http://en.wikipedia.org/wiki/Committee_of_Sponsoring_Organizations_of_the_Treadway_Commission

      From the CFO Journal's Morning Ledger on September 24, 2014

      Implementing COSO's Internal Control-Integrated Framework ---
      http://deloitte.wsj.com/cfo/2014/09/26/implementing-cosos-internal-control-integrated-framework/

      To unlock the value that can be achieved by adopting COSO's 2013 Internal Control-Integrated Framework, management should take a step back and evaluate how it is addressing the risks to its organization in light of its size, complexity, global reach and risk profile. Learn about leading internal control practices that may help address common challenges related to implementing the 2013 Framework, as well as perspectives on applying the framework for operational and regulatory compliance purposes.

      Continue Reading Today's Article --- http://deloitte.wsj.com/cfo/2014/09/26/implementing-cosos-internal-control-integrated-framework/

      Read More --- Deloitte Insights »http://deloitte.wsj.com/cfo/

      Bob Jensen's threads on managerial accounting ---
      http://www.trinity.edu/rjensen/Theory02.htm#ManagementAccounting