Marco Conceptual Coso

COSO FRAMEWORK

What is the COSO framework?
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COSO stands for “Commission of Sponsoring Organizations”; a private commission chartered to research and report on improving quality offinancial reporting through business ethics, effective internal controls and corporate governance. The sponsoring organizations of COSO are American Institute of Certified Public Accountants, the Institute ofInternal Auditors, Financial Executive International, Institute of Management Accountants, and American Accounting Association.

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COSO categories
1 2 3
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The firstcategory address an entity’s basic business objective, including performance and profitability goals and safeguarding of resources. The second relates to the preparation of reliable published financialstatements, including interim and condensed financial statements and selected financial data derived from such statements, such as earnings, reported publicly. The third deals with complying with thoselaws and regulations to which the entity is subject.

5 interrelated components

Why is it needed?
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It is needed to provide companies with better internal controls. Internal Controlis broadly defined as a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in thefollowing categories:
¤  Effectiveness

and efficiency of operations. ¤  Reliability of financial reporting. ¤  Compliance with applicable laws and regulations.

Why is it needed?
¨ Aligning risk appetite and strategy – Management considers the entity’s risk appetite in evaluating strategic alternatives, setting related objectives, and developing mechanisms to manage related risks.Enhancing risk response decisions – Enterprise risk management provides the rigor to identify and select among alternative risk responses – risk avoidance, reduction, sharing, and acceptance. Reducing...