Eelement of COSO (Committee of Sponsoring Organizations)

Control Environment
  • Is the basis for the rest of the components, contributing discipline and structure.
  • It includes: integrity and ethical values, the entity's employees competence, management's philosophy and operating style, the assignment of authority and responsibility, the organization and development of human resources and the management's direction.

Risk Assessment
  • First, consistent organizational goals must be identified and linked. Then the relevant risks that can negatively impact those objectives must be identified and assessed.
  • Risks should be managed, considering the changing internal and external environments.

Control activities
  • They are the policies and procedures that help ensure that measures are in place to limit the risks that may impact the organization's objectives.
  • E.g., authorizations, verifications, recon-ciliations, segregation of duties, operational  profitability reviews, etc.

Information & communication
  • The information required must be identified, captured and communicated in a form and timeframe that enable personnel to carry out their responsibilities.
  • The information can be financial or operational, from internal or external sources.
  • Appropriate communication channels must exist.
  • Personnel must be informed of the importance of their involvement in the effort to apply internal control.

  • A process must exist to verify that the internal control system continues to function over time.
  • This monitoring includes permanent tasks and regular reviews. The frequency of the later will depend on the assessment of the importance of the risks involved.
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