Latest information about COSO
COSO
COSO
or Committee of Sponsoring Organization of the Treadway Commission is a joint
initiative in order to against the fraud that occur in company. COSO
established in United States by five sector organization which are Institute of
Management Accountants(IMA), American Accounting Association(AAA), American
Institute of Certified Public Accountants(AICPA), Institute of Internal Auditor(IIA),
Financial Executives International(FEI)
At first, those five sector
organization establish ‘National Commission on Fraudulent Financial Reporting’
with purpose doing a research about fraudulent on financial reporting and
giving recommendation to public company, internal auditor, SEC, and also
education institution, should managing risk in order to avoid fraud, preserve
& realizing value, etc.
Even COSO is sponsored by 5
professional associations, this committee is independent and peoples that
include in there are come from different majoring such as Public
Accountant/Investor/Industry/etc.
They declare their first report on
1987 about integrated guidance on internal control. This committee continuously
develop their report from year to year.
Moving on to Internal Control,
based on COSO explanation Internal Control is process that run by board,
managements and staff to make reasonable assurance such as:
a. Effectiveness
& Efficiency of their performance
b.
The reliability
of financial report
c.
Compliance with
laws and regulations in affect
Here are the latest framework
about Internal Control that
a.
Internal
environment
b.
Objective setting
c.
Event Identifications
d.
Risk Assessment
e.
Risk response
f.
Control activities
g.
Information &
communication
h.
Monitoring
In 2004 COSO have a right to
control financial, because if its not changed & it can distract when
complying Sarbanes Oxley Act . It only could helps in the future.
Soooo
now let’s jump briefly about characteristics of framework that ERM Used:
a.
Internal
Environment: society foundation for how risk is view by entity’s people.
b.
Objective setting:
this should be exist before management can identify potential events that
affecting their struggling in order to achieve goals.
c.
Event identification:
events that presented by internal & also external that affecting the
achievement of entity’s goals. It should be distinguish between risks and
opportunities.
d.
Risk assessment:
this is a basis for determining how they should be managed. The risks are assessed
on residual basis and also inherent
e.
Risk response:
the process is like this, the management selects the risk responses then
avoiding-accepting-reducing and also develop a set of actions to align risks
with entity’s risk tolerances and risk appetites
f.
Control activities:
it adds more policies and procedure when implement to help ensure the risk
response are effectively carried out
g.
Information and
communication: relevant information make people easier to carry out the
information, so that they can take their responsibilities. Effective communication
also occurs in a broader sense, etc.
h.
Monitoring: from
the beginning until the end of the process is monitored or we can say that the
entire ERM process is monitored then the modifications is needed when something
goes wrong. This kind of activity accomplished through ongoing management
activities.
References:
II. -http://info.knowledgeleader.com/bid/163293/what-is-the-coso-enterprise-risk-management-framework
Created by:
Lintang Maharani
C1L014028
International Accounting
Jenderal Soedirman University
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