Who are the sponsoring organizations of COSO and what is COSO best known for doing?

To help increase the likelihood of Vanderbilt University achieving objectives and adapting to changes in the business and operating environments, we has adopted COSO’s Internal Control – Integrated Framework (2013) by which to evaluate the University’s system of controls.  COSO provides a  Framework for management, board of trust, external stakeholders, and others interacting with the University to use as a guide in carrying out their respective duties regarding internal control.  

Background

COSO, the Committee of Sponsoring Organizations of the Treadway Commission , is a private sector initiative established in 1985 with the intent of improving the quality of financial reporting through a focus on corporate governance, ethical practices, and internal control .  

The 2013 Framework  is expected to help​​ organizations design and implement internal control in light of many changes in business and operating environments, broaden the application of internal control in addressing operations and reporting objectives, and clarify the requirements for determining what constitutes effective internal control.  

COSO’s 2013 Internal Control — Integrat​​​​​​​​ed Fr​​amework

The 2013 Framework presents the direct relationship that exists between an entity’s objectives, which is what an entity strives to achieve, the components of internal control, which represent what is required to achieve objectives, and the entity’s organizational structure, the system by which activities are directed in the pursuit of achieving objectives. This relationship can be depicted in the form of a cube.

• Three categories of objectives are presented in columns (top of the cube): Operations, Reporting, and Compliance.
• Five internal control components are presented by rows (front of the cube): Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring.
• An entity’s organizational structure is presented by the third dimension (side of cube): Entity Level, Division, Operating Unit, and Function

Understanding the Internal Control Components

The five internal control components are supported by 17 principles which present fundamental concepts of each component. The 2013 Framework also provides additional guidance in the form of points of focus intended to assist management in the design, implementation, and assessment of relevant principles. Together, the components and principles constitute the criteria of the Framework and the points of focus provide guidance that will assist management in assessing whether the components of internal control are present, functioning, and operating together within the entity. 

Additional information regarding internal controls at Vanderbilt University can be found here.

Please contact us to learn more about the Framework and how it can be used to help achieve your business objectives.

Information presented on this webpage was compiled from the following authoritative source: Committee of Sponsoring Organizations of the Treadway Commission

COSO cube Graphic sourced from The Three Lines of Defense in Effective Risk Management and Control, The Institute of Internal Auditors, January 2013.