Question

Write an essay on COSO and its relationship with IFRS

Answer 1

Committee of Sponsoring Organizations of the Treadway Commission (COSO) states internal control as a process that is affected by management, an entity’s board of directors, and other personnel, designed for giving reasonable assurance of the achievement of motives in the categories of:

--Efficiency and effectiveness of operations

--Financial reporting reliability

-- Compliance with applicable rules and regulations

COSCO framework became vital part of global movement to improve periodic accounting and reporting of financial results. Coupled with the worldwide convergence to IFRS (International Financial Reporting Standards), it must provide reliability and comparability for a new age of financial information

As the audit committee is a vital component to the control environment of any corporation, members must include the five embedded principles applicable to the “control environment.” COSO describes them as below:

• Demonstrate commitment to ethical values and integrity.
• Establishment of structure, authority, and responsibility.
• Exercise oversight responsibility.
• Demonstrating accountability.
• Ensuring the commitment to competence.

The business and operating environment changes that drove COSO to smooth relation with IFRS are as below:

• Globalization of operations and markets.
• Expectations for governance oversight.
• Demands and complexities in rules, laws, regulations, and standards.
• Business models changes.
• Usage of advanced technologies.
• Expectations for accountabilities and competencies
• Expectations relating to prevention and detection of the corruption