The COSO, ICIC was first published in 1992. It is working well today, but COSO Committee feels that clarification, codification of certain principles and attributes as well as aligning it to present reality will make it more effective.
As per COSO – What is not changing
- Definition of internal control
- Five components of internal control
- The fundamental criteria used to assess effectiveness of systems of internal control
- Use of judgment in evaluating the effectiveness of systems of internal control
And what is changing
- Codification of principles with universal application for use in developing and evaluating the effectiveness of systems of internal control
- Expanded financial reporting objective to address internal and external, financial and non-financial reporting objectives
- Increased focus on operations, compliance and non-financial reporting objectives based on user input
Codification of 17 new principles
The following are the 17 new principles that are now clearly identified for a strong internal control framework.
Control Environment
- Demonstrates commitment to integrity and ethical values
- Exercises oversight responsibility
- Establishes structure, authority and responsibility
- Demonstrates commitment to competence
- Enforces accountability
Risk Assessment
- Specifies relevant objectives
- Identifies and analyzes risk
- Assesses fraud risk
- Identifies and analyzes significant change
Control Activities
- Selects and develops control activities
- Selects and develops general controls over technology
- Deploys through policies and procedures
Information & Communication
- Uses relevant information
- Communicates internally
- Communicates externally
Monitoring Activities
- Conducts ongoing and/or separate evaluations
- Evaluates and communicates deficiencies
The new internal control framework comes into effect sometime in 2012. It is still out for public comments.
More details can be found on the following link:
http://www.coso.org/documents/COSO%20IC-IF%20ED%20Outreach%20Deck_12%2029%2011.pptx