David Landsittel, the chairman of the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, wants auditors to get ready for the expanded internal control framework that he anticipates will be approved next year.
Speaking at an auditing conference at Baruch College's Zicklin School of Business in New York on Thursday, co-sponsored by the NASBA Center for the Public Trust, he said the new framework has been updated to reflect the current business environment. COSO has also formalized the fundamental concepts in the 1992 framework underlying the five components as 17 principles.
“We felt it was time to update the framework,” he explained. “While it has remained relevant, the context and the technology have changed since 1992 and governance is better.”
One of the elements that have been made more explicit is fraud deterrence. COSO has also expanded the financial reporting objective to address internal and external, as well as financial and non-financial, reporting objectives. There is also an increased focus on operations and compliance objectives based on user input.
Jennifer Burns, a partner in the Washington, D.C., office of Deloitte, said in a panel discussion with Landsittel that the new framework will be useful for auditors, but she would like the Public Company Accounting Oversight Board to provide guidance for making the transition from the 1992 framework to the 2013 framework. Landsittel said he believes the 1992 will continue to remain relevant. “The old framework isn’t broke,” he said. “We’ll continue to make it available, just as Microsoft does with Windows 7 even though Windows 8 is out. But the regulators may weigh in on the transition.”
The framework was developed with lots of pro bono help from PricewaterhouseCoopers, but the document isn’t PwC’s, Landsittel pointed out. He hopes to provide an electronic version of the new framework once it has been approved that will be searchable to make it much more usable, perhaps in PDF or EPUB format. J. Stephen McNally, finance director and controller at Campbell Soup, said that while the new document is much longer, it’s also much more usable than the 1992 framework and it’s easier to find the relevant information.