The wait for the eagerly anticipated update of a popular framework for internal control is almost over.
The board of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) has approved its updated Internal Control – Integrated Framework and expects to issue it May 14th, according to a news release distributed Wednesday.
Along with the framework, COSO will release a volume of illustrative tools for assessing the effectiveness of internal control, as well as a document called Internal Control Over External Financial Reporting: A Compendium of Approaches and Examples. The compendium is designed to help users apply the framework to external financial reporting.
In updating the framework and preparing the illustrative documents, COSO sought to help organisations adapt to complexity, mitigate risks and provide reliable information to support sound decision-making.
“While our original internal control framework, published in 1992, has stood the test of time, we are confident that the update will bring added benefits to users,” COSO Chairman David Landsittel said in a news release.
COSO’s board members believe users should begin using the new framework as soon as it is feasible after its release. But COSO will allow for transition to the updated framework by continuing to make the original 1992 framework available through December 15th 2014. After that date, the board will consider the original framework superseded and will no longer make it available.
During the transition period, continued use of the original framework is appropriate because its concepts and principles are sound and broadly accepted, according to COSO. Throughout the transition period, applications of the framework that involve external reporting should clearly disclose whether the original framework or the 2013 version was used, COSO said.
COSO is a joint organisation of five private-sector organisations that provides guidance on enterprise risk management, internal control and fraud deterrence. The American Institute of CPAs is one of COSO’s supporting organisations.
COSO is updating the framework to reflect changes in business and operations that have emerged since 1992. The framework update will explicitly identify 17 principles to help users achieve effective internal control.
The proposed framework was released for public comment in December 2011.
—Ken Tysiac (firstname.lastname@example.org) is a CGMA Magazine senior editor.