• Service: Advisory
  • Type: Publication series
  • Date: 10/9/2013

The Road to Transition 

COSO’s Internal Control 2013 – Integrated Framework

Since its inception in 1992, the Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s Internal Control — Integrated Framework has seen widespread acceptance in the design and evaluation of organizational internal control. Public companies and other entities globally use it to evaluate and document the effectiveness of their internal control systems, particularly those related to financial reporting (ICFR).

Recently, the COSO Board updated the framework to make it increasingly relevant for investors and shareholders amid a dynamic and rapidly evolving business environment. COSO’s 2013 Framework is, thus, aimed at enhancing organizations’ control structures within the context of a rapidly evolving business environment.

The Road to Transition
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What has changed?

The changes made to update the 1992 Framework are evolutionary, not revolutionary. The most significant change made in the 2013 Framework is the codification of the 17 principles that support the five components. The 17 principles were fundamental concepts implicit in the 1992 Framework. For effective internal controls, the 2013 Framework requires that each of the five components and the 17 relevant principles be present and functioning; and the five components must operate together in an integrated manner. Present means that the components and relevant principles exist in the design and implementation of the system of internal control, and functioning means that the components and relevant principles continue to exist in the system of internal control. These components, shown in the table below, along with their related principles, serve as comprehensive guidance for companies looking to strengthen their internal control systems.