The Committee of Sponsoring Organizations of the Treadway Commission has released a new paper examining how frameworks such as the ones it has issued for internal control and enterprise risk management can improve the performance and governance of an organization.
The paper was co-authored by Protiviti managing director James DeLoach and Institute of Management Accountants president and CEO Jeffrey C. Thomson.
“Our purpose in writing this paper is to relate the COSO frameworks to an overall business model and describe how the key elements of each framework contribute to an organization’s long-term success,” DeLoach said in a statement.
Since it was founded in 1985, COSO has provided thought leadership and guidance on internal control, ERM, and fraud deterrence. Its frameworks, "Internal Control Integrated Framework" and "Enterprise Risk Management Integrated Framework," offer a blueprint for helping organizations ensure effective controls and proficient risk management. The new paper provides a way to relate these frameworks to governance, strategy setting, and management processes.
“COSO’s fundamental premise is that effective risk management and internal controls are crucial to sustaining an organization,” said COSO chairman Robert Hirth.
Throughout the paper, the authors demonstrate how the COSO frameworks can contribute value to governance, strategy setting, business planning, execution, monitoring and adapting processes of any organization.
“This is because these two important frameworks are designed to provide reasonable assurance that objectives will be met and risk reduced to an acceptable level,” Thomson said. “And that is essential to good business, effective governance, and long-term sustainability.”
The authors point out that COSO frameworks use a common language for risk-focused communications, enabling directors, executive management, and internal and external stakeholders to communicate more effectively.
“The enhanced dialogue from implementing the frameworks can lead to strengthening organizations in significant ways as they serve their mission, stakeholders and society,” said DeLoach
The paper, "Improving Organizational Performance and Governance: How the COSO Frameworks Can Help," can be downloaded for free from COSO’s Web site, www.coso.org, as well as from the Web sites of COSO’s five sponsoring organizations.