COSO Report -What is a COSO Report?
Content COSO is The Committee of Sponsoring Organizations of The National Commission of FraudulentFinancial Reporting) abbreviation. 1992 Treadway Commission, after years of study, for the company's Chief Executive Officer, other senior executives, directors, legislative and regulatory authorities to conduct a high degree of internal control summary issued "Internal Control-Integrated Framework" (InternaControl-IntegratedFramework) report, commonly known as the COSO report. The first part of the report summary; the second part is to define the framework for a complete definition of internal control, describes its components for the company's management, board of directors and other personnel assess their internal control systems of rules; The third component is the external group reports; is to report on the preparation of statements of internal control group to provide guidance supplementary documents; fourth component is the evaluation tool for the evaluation of internal control systems to provide useful material.
COSO report on the significance of
COSO report is in the United States increased financial risk, financial fraud, the rise of the community's internal controls and independent auditors have high hopes of "distress" moment, the five professional accountancy bodies in the joint, and applied himself to studying the past four years or so before the birth. COSO report, implies a number of new concepts and ideas. These concepts and ideas, not only to the past, but right now even the future of business management, accounting work and independent audit all have an important impact. Mainly in the following areas:
1. Accurate positioning the basic objectives of internal control. COSO report states that internal control is not an end in itself, but rather a means to achieve its objectives. Internal control objectives is to help companies toward business objectives to fulfill our mission and reduce risks in business processes. The use of Chinese words is to enterprise operations and management of the "escort."
2. Made three types of goals, the concept of five elements. COSO internal control to be broken down into operational efficiency and effectiveness, financial reporting, reliable and law-abiding three sub-goals and control environment, risk assessment, control activities, information and communication and monitoring activities in the five constituent elements. Of these concepts proposed for the evaluation of internal control system provides a complete set of standards to ensure that COSO report on theoretical and practical application of two aspects of internal control than the original theory there is a qualitative leap.
3. Proposed internal control is the "process" by the control environment, risk assessment, control activities, information and communication and monitoring activities in the five elements of composition. 5 control factor is not an internal control process the order on a working procedure, but rather a multi-dimensional multi-directional cross-iterative process. COSO report highlights the complexity of the internal control process and the various control elements of the link between the organic and impact of multi-dimensional.
4. Emphasis on "people" importance. COSO report points out that people and the environment is to promote enterprise development engine. Internal control is designed and implemented by people, and businesses in each employee are subject to the impact of internal control, and through their work affects the work of others and the entire internal control systems. Therefore, requiring all employees should be aware of their enterprise, in the internal control system, the position and role, and coordinated in order to promote the effective functioning of internal controls.
5. Recognizing that the board's role in internal control. COSO internal controls that the board of directors with the company there is a link between the enterprise some require a board approval or authorization. An objective, dynamic and full of the spirit of the investigation board, the ability to detect and correct the internal control manager of the company team crossed the line furnace. 6. Emphasized that the Department of internal control systems are "built" (builtin) business and management in an infrastructure (infrastructure), and management activities, planning, implementation and monitoring functions of the interwoven together, not acquired additives (builton). At the same time the internal control system should respond to the changing of the objective world mechanism.
The composition of the COSO internal control report===>
