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COSO Committee of Sponsoring Organizations of the Treadway Commission-…

- - - - Risks are: human errors, uncertainty inherent in judgment, when people collude, override control from management
      - Adaptable to the entity structure
        
        Legal entity structure/organization may be different than operating model => internal control may be adaptable to those different structures
  - - - Return on investment, market share, entry into
        
        Internal control has no control on bad judgments, bad analysis IC =W reasonable assurance that management and the board
        are made aware
    - - Compliance objective
      - Reporting objectives
      - Overlapping Objectives: reporting and compliance
  - - - Tone of the importance given to the Internal control
- - - - Internal /external environment, business model, etc.
      - Foreign operations
      - Rapid Growth
      - New technology
  - - - Dependency btw usage of technology and business processes.
      - Technology acquisition, development, maintenance processes
  - - - Identifies info requirements, captures int/ext sources of data, processes relevant data into Info, maintains quality Throughout Processing, considers costs and benefits
    - - Communicates to Ext parties, enables inbound communication, comm with the BoD, provide separate communication lines, selects relevant method of communication
      - INBOUND/OUTBOUND communication
  - - - Considers a mix of ongoing and separate evaluations, consider rate of change, establishes baseline understanding, uses knowledge personnel integrates with Business processes, adjust scope and frequency, objectively evaluates
    - - Assess results, communicates deficiencies, monitors corrective actions
      - SIGNIFICANT DEFICIENCY/ MATERIAL WEAKNESS
- - - - How the components are being applied by the entity within the system of IC
      - each component helps ti reduce to an acceptable level the risk of not achieving an objective
      - Components should not be viewed discretely: they must operate together as an integrated system
      - Change of components should not be viewed in isolation. assess impact of a change on the other components
      - adaptable to the structure of the entity, function, operations
    - - Present: determination that components and relevant principles exist in the DESIGN and IMPLEMENTATION of the system of OC
      - Functioning: determination that components and relevant principles continue to exist in the operation and conduct of the system of OC
      - Implies that the organization understands the intent of components and how relevant principles are being applied and helps personnel understand and apply relevant principles across the entity
        and views weaknesses in, or absence, of a principle as a situation that triggers management attention
    - - 17 principles as suitable to all entities
      - they should be relevant
  - - - combination of automated and manual processes and computer HW and SW, methodologies and procsses => all computerized systems
  - - - Feedback
      - Confidence
      - meet requirements to access capital markets
      - Reliable reporting
      - consistent mechanism fior processing transactions
      - increase efficiency within functions and processes
    - - Trade off btw recruiting and retaining staff
      - potential incremental efforts to add to the business process; add the efforts to maintain and update the control activity
      - assessing the impacts of added reliance on technology
- - - - Achievement of Entity's basic mission and vision
        
        Financial perfo
        
        Productivity
        
        Customer and employee satisfaction
        
        Quality
        
        Environmental practices
        
        Innovation
        
        Safeguarding of assets
    - - External Financial reporting Objectives
      - External Non-Financial Reporting Objectives
      - Internal Financial and Non-Financial Reporting Objectives
    - - Laws
      - Regulations
      - Standard of conduct