Internal controls

[Moon]

Well, no one can disclaim the significance of internal controls. I would like the participants comments on how an organization's internal controls can be assessed mnz what are the tools used to determine that internal controls are effective and that these can be relied upon to reduce the control risk?

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Be careful! Words speak....

[iahmad]

COSO stands for ¡§Committee of Sponsoring Organization¡¨ is voluntary private sector organization dedicated to improving the quality of financial reporting through business ethics, effective internal controls and corporate governance. A nonprofit commission that in 1992 established a common definition of internal control and created a framework for evaluating the effectiveness of internal controls.

COSO Internal Control ¡V Integrated Framework defines internal control as a ¡§Process¡¨ to achieve the following objectives

„« Effectiveness and efficiency of operations;
„« Reliability of financial reporting;
„« Compliance with applicable laws and regulations;

The COSO framework views internal controls as consisting of the following five interrelated components
A). Control Environment;
B). Risk Assessment;
C). Control Activities;
D). Information and Communication;
E). Monitoring;
for further detail please visit
www.coso.org

[Moon]

<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by iahmad</i>
<br />

COSO Internal Control ¡V Integrated Framework defines internal control as a ¡§Process¡¨ to achieve the following objectives

„« Effectiveness and efficiency of operations;
„« Reliability of financial reporting;
„« Compliance with applicable laws and regulations;


<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

can we say that these are the factors or benchmarks against which the internal controls can be tested?

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Be careful! Words speak....

[iahmad]

Yes you are right, in USA this framework has been applivable sinec 2003, and all the subsidaries of USA companies all over the world are also required to adopt the same faramework for the Internal Controls.

Further for your information SBP (State Bank of Pakistan) has also issued a SRO, thereby requiring all banks to adopt the COSO Framework and to be compliant with Internal Control reporting.

[Moon]

can u give me the reference of tha circular of sbp so that i can get that from sbp website
.

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Be careful! Words speak....

[CBPian]

<b>Corrections</b>
1. PCAOB is the body created to ensure compliance of <b>US public companies, their subsidiaries and foreign issuers of equity listed in US stock exchanges </b> with SARBANES OXLEY act of 2002 most notably the section 404 compliance. So not all US companies are required to comply with it.
2. the act and 404 compliance deals with Internal controls over financial reporting only .
3. PCAOB presrcibes COSO as one of several frameworks a company can employ to assure compliance with 404. So, COSO is not a requirement or exclusive framework.
4. COSO itself is more encompassing and in some areas deficient than what is required for 404 compliance; accordingly it always needs to be modified to include or exclude additional processes to complete the compliance process.

Finally, I would also like to see the reference to the directive where COSO is made mandatory in Pakistan. Thanks.

[Moon]

http//www.sbp.org.pk/DFI_index.asp

Please follow the link. Though SBP has not mentioned in its circular for specific compliance with COSO but its contents are similar to that of COSO like components of internal controls etc.
It states that;


"Various models/methodologies are used for the design and implementation of internal controls.
However, it is the decision of the organizations to decide what model / strategy suit the size,
nature, complexity, scope, risk exposure, etc. of their activities."

So there is no specific requirement for compliance with the COSO but with the SBP guidelines.

Regards.

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If you are a politician then you are a lier, but if you are a lier you may not be a politician!
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Be careful! Words speak....

[Schuaeb]

Hi all,

I was searching for COSO releases on the internet specifically for its new release Guidance on Monitoring Internal Controls and another one Internal Control - Integrated Framework. The introductions/guidance/executive summaries of these publications are available at various place but they do not serve the purpose. I would appreciate if someone can share any of these releases or something that can provide help regarding Internal Controls assessment. I do have, COSO Guidelines for Financial Reporting (medium sized entities, however, that is not as useful for me.

Thanking in advance

Regards
Shoaib

[kamranACA]

Give me your e-mail address. I may be of some help though not very much sure.

Regards,

[Schuaeb]

Sorry for replying late. My e mail id was available in my profile that is [email protected]

[Waqar Malik]

SOX & COSA are the best

[Schuaeb]

Dear Waqar,

Do you have got any knowledge detailed than that? I guess you referred to COSO by saying COSA