New guidance stressing efficient application of effective internal controls over financial reporting was released in mid-July by the Committee of Sponsoring Organizations of the Treadway Commission.The guidance, titled "Internal Control over Financial Reporting - Guidance for Small Public Companies," was released with a Webcast that was attended by over 1,750 participants.
"Our primary goal is that these smaller businesses will use the guidance as a springboard for designing and implementing processes that will help them better run their businesses, as well as to evaluate the effectiveness of their internal controls for regulatory purposes," said COSO chair Larry Rittenberg, in a statement.
The document identifies a number of obstacles towards attaining cost-effective control, but argues that such challenges can be overcome. Specifically, the guidance makes recommendations for management philosophy, organizational structure, the assignment of authority and responsibility, and a number of risk assessment objectives, among others.
COSO's "Internal Control - Integrated Framework" document, released in 1992, has served as the internal control standard for organizations implementing and evaluating internal control in compliance with the Sarbanes-Oxley Act.
"This guidance is an important part of improving the implementation of Section 404 so that it will work efficiently and effectively," said the director of the Securities and Exchange Commission's Division of Corporation Finance, John White. "I expect it will help the commission as we proceed with our announced plans to develop guidance for management on how to assess its internal control over financial reporting."
More information is available at www.theiia.org.
