By now, most companies have begun to transition from The Committee of Sponsoring Organizations of the Treadway Commission (COSO) 1992 Internal Control—Integrated Framework to the updated COSO 2013 framework. In fact, many companies included a statement regarding their transition status under Controls and Procedures (Part I, Item 4) in their most recent Form 10-Qs.
Now that the December 15, 2014 COSO 2013 “deadline” is upon us and 2014 audits will start up soon, it’s time to update where you are in the transition process and reconsider why you should care.
A brief background…
The SEC requires that each company adopt a “suitable framework” for compliance with the Section 404 internal control provisions of the Sarbanes-Oxley Act. Furthermore, Regulation S-K Item 308(a)(2) requires that Management’s Report on Internal Control Over Financial Reporting identify the framework used by management to evaluate the effectiveness of the company’s ICFR. It is standard practice for that report (and the independent auditor’s attestation) to reference the COSO framework.
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