Internal Control Frameworks: COSO, CoCo, and the UK Corporate Governance Code

published by QFinance, Juy, 2011.

Definition

In auditing and accounting, internal control is defined as a process that is designed to help an organization to accomplish specific goals or objectives.

Organizations can choose from a number of internal control frameworks. The “Internal control—Integrated framework” published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a widely used framework in the United States and around the world. It was initially published in 1992 “to address key challenges presented by an increasingly complex business environment and help organizations worldwide better assess, design, and manage internal control.” The COSO framework defines internal control as a process, effected by an entity’s board of directors, management, and other personnel, that is designed to provide “reasonable assurance” regarding the achievement of objectives in the following categories:

  • effectiveness and efficiency of operations;
  • reliability of financial reporting;
  • compliance with applicable laws and regulations.

COSO describes internal control as consisting of five essential components. These components, which are subdivided into 17 factors, include:

The CoCo (criteria of control) framework was first published by the Canadian Institute of Chartered Accountants in 1995. This model builds on COSO and is thought by some to be more concrete and user-friendly. CoCo describes internal control as actions that foster the best result for an organization. These actions, which contribute to the achievement of the organization’s objectives, focus on:

  • effectiveness and efficiency of operations;
  • reliability of internal and external reporting;
  • compliance with applicable laws and regulations and internal policies.

CoCo indicates that control comprises: “Those elements of an organization (including its resources, systems, processes, culture, structure, and tasks) that, taken together, support people in the achievement of the organization’s objectives.”

The UK Corporate Governance Code (formerly the Combined Code) was developed by the UK authorities in the early 1990s and last updated in 2010. The Code is principles-based and includes guidelines for best practice. All companies with a Premium Listing on the London Stock Exchange are required to report on how they have complied with the Code and to provide an explanation where they have not. (continue reading… )

0 Responses to “Internal Control Frameworks: COSO, CoCo, and the UK Corporate Governance Code”



  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s




Blog coordinator

Cefeidas Group

Archives

cgl-med-linked-in

cgl-med-linked-in
free counters

%d bloggers like this: