Things to Know About COSO
COSO stands for the Committee of Sponsoring Organizations of the Treadway Commission. It is a joint initiative of five private sector organizations that aims to provide guidance and thought leadership related to enterprise risk management, internal control, and fraud prevention. Here are some key things to know about COSO:
COSO Framework: The COSO Framework is a widely recognized model for internal control that outlines the components and principles of effective internal control. It consists of five components: control environment, risk assessment, control activities, information and communication, and monitoring activities.
History: COSO was formed in 1985 in response to growing concerns about fraudulent financial reporting. The Treadway Commission, which was established by the US Congress, sponsored the initiative.
Impact: The COSO Framework has been widely adopted by organizations around the world as a best practice for internal control. It is also referenced in many regulatory and compliance requirements.
COSO ERM Framework: In 2004, COSO released the Enterprise Risk Management (ERM) Framework, which guides on implementing an effective risk management program. The ERM Framework consists of eight components: internal environment, objective setting, event identification, risk assessment, risk response, control activities, information and communication, and monitoring.
Updates: In 2013, COSO updated its internal control framework to address changes in the business environment and advancements in technology. The updated framework includes 17 principles that organizations should follow to implement effective internal control.
Overall, COSO is a respected and influential organization in the fields of internal control, risk management, and fraud prevention. Its frameworks and guidance have been widely adopted by organizations around the world to improve their internal control systems and reduce the risk of financial loss or reputational damage.