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The COSO framework has become a big part of both internal management and accounting activities, as...

The COSO framework has become a big part of both internal management and accounting activities, as well as important to financial statement auditors... a) Briefly describe the PURPOSE or GOAL of internal controls and COSO. b) In no more than 2 sentences each - describe the 3 broad objectives in the COSO framework and how much Auditors care/concern about each objective (e.g. 1 sentence on each objective and 1 sentence on how much Auditor cares/concerns).

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Answer #1

Answer to question (a)

The COSO model defines internal control as “a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance of the achievement of objectives in the following categories: Effectiveness and efficiency of operations. Reliability of financial reporting.

COSO developed the framework in response to senior executives' need for effective ways to better control their enterprises and to help ensure that organizational objectives related to operations, reporting, and compliance are achieved.

Answer to question (b)

There are three categories of objectives, which allow organizations to focus on differing aspects of internal control:

  • Operations - Refers to the effectiveness and efficiency of the organizations operations, including operations and financial performance goals and safeguarding assets against loss.
  • Reporting - Relates to internal and external financial and non-financial reporting and may incorporate reliability, timeliness, transparency, and additional terms as set forth by regulators, recognized standard setters, or the entity’s policies.
  • Compliance - Relates to adherence to laws and procedures to which the entity is subject.

Auditor cares/ concerns

Operation - Auditor do concerns about operating effectiveness of an organization related to safeguarding assets and financial performance.

Reporting : frequency of reporting and regulated by external factors and organisation internal mechanism.

Compliance : controls in place to ensure compliance with applicable laws and procedures.

  

  

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