COSO Agreement: What You Need to Know
The Committee of Sponsoring Organizations (COSO) is a joint initiative of five private sector organizations dedicated to providing guidance on enterprise risk management, internal control, and fraud deterrence. The five organizations are the Institute of Management Accountants, the American Accounting Association, the Institute of Internal Auditors, Financial Executives International, and the National Association of Accountants.
COSO released its Internal Control-Integrated Framework in 1992, which has become a widely accepted framework for designing, implementing, and evaluating internal control. The framework helps organizations to identify and mitigate business risks, improve decision-making, and enhance accountability.
COSO has also been involved in developing a new framework for enterprise risk management (ERM), which was released in 2017. The ERM framework provides guidance on how organizations can manage risks in a rapidly changing business environment.
In addition to its work on internal control and enterprise risk management, COSO has also developed a framework for fraud deterrence, known as the Fraud Risk Management Guide. This guide provides guidance on how organizations can detect, prevent, and deter fraud.
To promote the use and understanding of its frameworks, COSO has entered into agreements with various organizations. The agreements involve the organizations endorsing COSO`s frameworks and promoting their use within their respective industries. COSO has agreements with the American Institute of Certified Public Accountants, the Association of Certified Fraud Examiners, and the International Federation of Accountants, among others.
The COSO Agreement is a commitment by an organization to embrace and implement the principles outlined in COSO`s frameworks. It is a sign of an organization`s commitment to good governance, risk management, and internal control. By entering into a COSO Agreement, organizations can demonstrate to stakeholders that they are committed to managing risks and enhancing accountability.
In conclusion, the COSO frameworks are essential tools for organizations seeking to manage risks and improve decision-making. By entering into a COSO Agreement, organizations can demonstrate their commitment to good governance, risk management, and internal control. As a professional, I recommend that organizations take the time to familiarize themselves with COSO`s frameworks and consider entering into a COSO Agreement to promote their use and understanding within their industry.