COSO ICIF UpdatePosted: July 30, 2012
The COSO Advisory Council met July 24 in Chicago to review the latest developments on the COSO Internal Control Integrated Framework update project. We reviewed updates to the Integrated Framework, the Approaches and Examples for Internal Control over External Financial Reporting document and the Assessment Tools document. All three documents will be available for review when the Approaches and Examples document is exposed for comments in September.
The COSO Board received considerable input on the Integrated Framework including 96 comment letters and over 100 submissions via the web questionnaire during the exposure period that ended in March. The Board has responded with many changes to address concerns raised in the exposure process. The 5 components and 17 principles will still exist, but the framework’s use of attributes will change (even the term attributes is being changed). There are many other changes as well that should make the framework even more useful and operational, but I don’t want to get ahead of myself. You will be able to see all of the changes for yourself in September.
Even though COSO is not a standard setter and the Internal Control Integrated Framework is not an official standard, working on the Advisory Council has given me a appreciation for what standard setters have to deal with. With the framework being used by 85% of public companies in the U.S. to comply with SOX 404b requirements, it has many commonalities with a standard. Comments ranged from too much was changed to not nearly enough was changed in the update. I expect the final product won’t make either of the extremes happy, but I am beginning to believe that is part of the standard setting process. If you balance the unhappiness of both sides, maybe that means you have struck the right balance in the final product.
You can decide for yourself if I am right and even let the COSO Board know your thoughts come November when comments on the Approaches and Examples for Internal Control over External Financial Reporting are due.