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COSO 2013For Austin AGAJanuary 2014
Changes are less than earthshakingMore than 71 percent of internal audit executives at public companies said they they expect adoption of the new framework to be not significant or somewhat significant; only 22 percent said they expect implementation to be moderately or extremely significant.
IIA survey quoted in Compliance Week article: SEC Drops New Hint: Update to New COSO Framework by Tammy Whitehouse 11/13
20 YEARS
19922013Increased stakeholder expectations for transparency regarding controls– Sarbanes Oxley– A-123– ?
19922013Emphasis on governance
19922013Reliance on technology
19922013Complex business models– Global– Outsourcing
19922013Awareness of fraud
9
New structure
Same 5 componentsAdd 17 principles
And 82 points of focus
Under RISK ASSESSMENT COMPONENT
Principle 8 – The organization considers the potential for fraud in assessing risks to the achievement of objectives. • Points of Focus: – Considers various types of fraud – Assesses incentives and pressures – Assesses opportunities – Assesses attitudes and
rationalizations
Quote from the 2013 COSO Executive Summary
When a major deficiency exists with respect to the presence and functioning of a component or relevant principle, or with respect to the components operating together in an integrated manner, the organization cannot conclude that it has met the requirements for an effective system of internal control.
14
Leita’s version of COSO
Risk Assessment
Control Activities
Information and Communication
Control environment
MONITORING
Leita Hart-Fanta, CPA, CGFM, CGAP [email protected]
15
Which element of the COSO model?
1. Establish goals and objectives annually2. Report frequently to oversight agencies3. Send financial data to department heads each week4. Administrative staff in Engineering inspects budget
amendments created by accounting each month5. Link risks to the goals and objectives of the
department6. Establish an ethics policy7. Force users to create new passwords for the
customer application each month8. Delegate authority and responsibility in job
descriptions9. Reconcile reports to federal grantor to the general
ledger10. The same person that opens the mail does not
record the receipt and make the deposit11. Put performance measures for each department on
the internet
Leita Hart-Fanta, CPA, CGFM, CGAP [email protected]
Governance
Enterprise risk management
Internal controls
COSO
Integrated auditing
• Compliance• Financial• Operational• Fraud• IT
