COSO Internal Control - Integrated Framework

In November 2010, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) announced a project to review and update the 1992 Internal Control - Integrated Framework. COSO’s goal in updating the framework is to increase its relevance in the increasingly complex and global business environment so that organizations worldwide can better design, implement and assess internal control.

COSO engaged PwC as author of the update. In turn, PwC received valuable input from the Advisory Council and other stakeholders. The proposed Framework retains the core definition of internal control and the five components of internal control. A significant enhancement is the expression of concepts described in the original framework as 17 principles, accompanied by related attributes. These principles and attributes should assist organizations as they apply judgment in improving performance and managing risk in changing business and operating environments.

This Framework will provide organizations with significant benefits – for example, by increasing confidence that controls mitigate risks to acceptable levels and by providing reliable information to support sound decision-making. Furthermore, because the definition of internal control and its five underlying components are not changing, the codification of the principles and attributes will not impose additional burdens or a higher threshold for designing and maintaining an effective system of internal control.

COSO is now seeking feedback comments on the proposed Internal Control - Integrated Framework. A series of questions are included in the exposure draft for consideration by participants. The comment period closes March 31, 2012.

PCAOB Concept Release on Auditor Independence and Audit Firm Rotation

On August 16, 2011, the US Public Company Accounting Oversight Board (PCAOB) issued a concept release to solicit public comment on ways that auditor independence, objectivity and professional skepticism could be enhanced.


One possible approach on which the Board is seeking comment is mandatory audit firm rotation, which is explored in detail in PCAOB Release No. 2011-006. However, the Board seeks advice and comment on other approaches as well. Comments should be submitted no later than December 14, 2011. The Board will also convene a public roundtable meeting in March 2012, at which interested persons will present their views. Additional details about the roundtable will be announced at a later date.

IAESB proposes education work plan

The International Accounting Education Standards Board (IAESB) has invited organizations and individuals with an interest in accounting education to comment on its proposed 2010-2012 Strategy and Work Plan. The proposed strategy focuses on projects and activities aimed at developing International Education Standards (IES), while providing adoption and implementation guidance to interested stakeholders in accounting education. The work program contains a number of potential projects for consideration. Comments are requested by October 5, 2009. (Read the IAESB Press Release and download the IAESB exposure draft.)

SEC Advisory Committee on Financial Reporting

The US Securities and Exchange Commission (SEC) Advisory Committee on Improvements to Financial Reporting met on March 13-14, 2008 in San Francisco. It discussed the proposals published on February 14, 2008 as part of the Progress Report to the SEC. The discussion focussed on restatements, professional judgment and XBRL. (View the Agenda for the meeting and the Project webpage.)

Principles-based standards and capital-market stakeholders

On January 15, 2008, the world’s six largest audit and accounting networks hosted the fourth Global Public Policy Symposium in New York. At this meeting, approximately 300 investors, regulators and standard-setters from around the world came together to discuss a series of issues key to the capital markets. A white paper on Principles-Based Accounting Standards was formally released by the CEOs of the international audit networks. The firms believe a commonly-accepted framework on the development of principles-based standards is essential as more countries adopt IFRS.

Addressing complexity in US financial reporting

In 2007, the US Securities and Exchange Commission formed the SEC Advisory Committee on Improvements to Financial Reporting to study the causes of complexity in the US financial reporting system. On January 11, 2008, the Advisory Committee held its third meeting and made tentative decisions on proposals set out in a Draft Decision Memo. The Advisory Committee plans to publish its final recommendations in the third quarter 2008. (Visit the Advisory Committee's Web Page on the SEC website.)

War on Complexity

The US Securities and Exchange Commission (SEC) has joined with the Financial Accounting Standards Board (FASB) in an all-out “War on Complexity in Accounting.” The SEC’s Advisory Committee on Improvements to Financial Reporting has the overall objective of making recommendations on reducing complexity in financial reporting. It held its second meeting on November 2, 2007. Its charter identifies four areas for attention:

• the current approach to standard-setting;
• the current approach to regulating compliance;
• factors that may drive unnecessary complexity; and
• lessons that can be learned from using international standards.