COSO Supports Integration of Strategy and ERM
On Nov. 4, 2009, The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released a new thought paper, Strengthening Enterprise Risk Management for Strategic Advantage. The paper highlights specific areas where senior management can work with its Board of Directors to enhance the Board’s risk oversight capability. Read more

COSO Elects New Chairman
The Committee of Sponsoring Organizations (COSO) of the Treadway Commission has elected David L. Landsittel, CPA as its new chairman. Jeff Thomson, IMA’s President and CEO, took the lead in the organization’s search for the Chairman’s position.

Mr. Landsittel was selected after an extensive four-month search. The COSO board was particularly impressed with his leadership skills, knowledge of risk management and control, his previous service as chairman of the Auditing Standards Board, as well of his leadership in the development of the external auditor’s responsibility for detecting fraud (SAS 99). As COSO chairman, Mr. Landsittel will lead the COSO board in developing and providing continuing guidance in risk management, internal control, fraud, and governance. His other major responsibilities will include interacting with regulators, such as the United States Securities and Exchange Commission (SEC), the Public Company Accounting Oversight Board (PCAOB), and similar organizations – on issues related to internal control reporting and risk management reporting. He will represent COSO with financial leaders of major countries around the world and identify new areas in which COSO can enhance the efficiency of organizations through better risk management and internal controls.

Mr. Landsittel replaces Larry E. Rittenberg, PhD, CPA, CIA, who served as COSO Chairman since 2005. Recognizing Mr. Rittenberg’s outstanding leadership of COSO during the last four and a half years, its Board has designated him as “chair emeritus.” In that role, he will provide important support to Mr. Landsittel and the COSO Board in implementing COSO’s strategic plan that has been developed during the past two years.

Mr. Landsittel is currently a consultant to accounting firms and others on auditing, financial reporting, corporate governance, and quality control matters. He also serves on the board of directors and chair of the audit committees for Molex Incorporated and Burnham Investors Trust for the Burnham Family of Funds. Mr. Landsittel began his career and spent 34 years with Arthur Andersen & Co. He was previously chair of the Illinois CPA Society and more recently chair of the CPA Endowment Fund of Illinois, a not-for-profit group that provides scholarships and encourages qualified students to pursue careers in public accounting. He holds an MBA from the University of Chicago Graduate School of Business and an undergraduate degree from DePauw University.

COSO Releases Guidance on Monitoring Internal Control
On February 4, 2009, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released Guidance on Monitoring Internal Control Systems. A four-page introduction is available free of charge on COSO’s website at www.coso.org/GuidanceonMonitoring.htm and the full guidance is available for purchase.

Although many organizations have effective monitoring, they often do not take full advantage of the information provided. In other cases, an organization’s routine monitoring is not as effective as it could be, resulting in additional testing at or near year end. In both cases, an improved approach to effective monitoring implementation can enhance the effectiveness of internal control systems.

Developed by COSO and led by a diverse Grant Thornton LLP team, the guidance is designed to help organizations identify and maximize effective internal controls monitoring and take timely corrective actions as needed. The new guidance is designed to help practitioners understand that effective monitoring is both risk-based and principles-based. The guidance consists of three volumes: Guidance, Application, and Examples, and is available in print and electronic formats.

As one of COSO’s founding organizations, along with the American Accounting Association (AAA), the American Institute of Certified Public Accountants (AICPA), Financial Executives International (FEI), and the Institute of Internal Auditors (IIA), COSO’s Guidance on Monitoring Internal Control Systems is available for purchase at a discounted rate for IMA members. Click here for details. (Note: Orders will be processed through AICPA’s website for all organizations. Once on the AICPA website, scroll down to receive the discount.)

COSO Seeking New Board Chair; Highly Qualified IMA Members Encouraged to Apply
IMA members interested in applying for this position may forward a résumé/CV and a letter of interest to Jeff Thomson, IMA president and CEO, at jthomson@imanet.org.

COSO is seeking a new Board Chair. The elected position will commence on June 1, 2009 for a three-year term. As one of COSO’s five sponsoring organizations, highly qualified IMA members are encouraged to apply for this influential global position.

The COSO Board Chair provides strategic oversight for COSO, serves as the organization’s key representative to the external marketplace (SEC, PCAOB, U.S. Department of Treasury, and related global organizations), and is a voting member of the COSO Board of Directors. Candidates for the Board Chair position must be highly experienced and recognized thought leaders in risk management, internal controls, governance, and fraud deterrence.

IMA members can read issue #148 of ION that was released on January 13, 2009 to view the full Summary Position Description of the COSO Board Chair and COSO’s Mission and Operating Policies.

COSO Releases Discussion Document withGuidance on Monitoring Internal Control
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is pleased to announce the release of a discussion document: Guidance on Monitoring Internal Control Systems. Developed by COSO and led by a diverse Grant Thornton LLP team, the guidance is designed to help organizations monitor the quality of their internal control systems. Jeff Thomson is VP of Research and Applications Development at IMA and is a COSO Board Member. Andre van Hoek, formerly Assistant Controller at J&J and now Controller at Celgene Corporation, is IMA's primary task force representative on the COSO Monitoring project.

The guidance more fully develops the monitoring component of COSO’s Internal Control - Integrated Framework. The guidance is appropriate for organizations of any size or structure to improve the quality of their internal controls systems for multiple business purposes, but especially those dealing with the reporting requirements under the U.S. Sarbanes-Oxley Act of 2002, Section 404.

In the discussion document, COSO has asked specific questions to ensure the clarity and applicability of the guidance. A copy of the discussion document can be found on IMA’s website under the Professional Partnerships section/COSO. There are two opportunities for IMA members to get engaged in this important project and to make a difference. First, as a management accounting professional, review the discussion draft guidance on monitoring and provide comments by October 31. This will ensure a high quality final product (first half of next year) and ensure that the "inside" management view of risk and performance management is embedded in the process. A link to view the document and to submit comments can be found at www.coso.org. Please identify yourself as an IMA member when submitting comments. Secondly, in the next phase of the project later this year, COSO is looking to develop specific implementation tools and examples - so, here is an opportunity for companies represented by IMA membership to benefit other organizations by identifying best practices, tools, and lessons learned in monitoring processes. Names of organizations will be kept confidential if so desired.

COSO selects Grant Thornton to conduct research – Project to Focus on Monitoring of Internal Control

On January 8, 2007, COSO announced in a press release that Grant Thornton has been commissioned to develop guidance designed to help organizations monitor the quality of their internal control systems. COSO’s selection of Grant Thornton to work on the project is a follow up on COSO’s issuance of a Request for Proposals (RFP) on October 17, 2006 for companies to work on the project. The end product will serve as a tool for effectively monitoring internal controls, as well as complying with the U.S. Sarbanes-Oxley Act of 2002. Andre Van Hoek, Assistant Controller from Johnson & Johnson and Jeff Thomson, IMA’s Vice President of Research and Applications Development and COSO board member, will be members of the project team that will focus on this issue. According to COSO Chairman Larry Rittenberg, PH.D., the development of the project will be on a 12-month timeline to meet the need for example, guidance, and more information regarding the monitoring component of COSO’s Internal Control – Integrated Framework. A copy of the press release about the project and the RFP can be found on IMA’s website under the Professional Partnerships section/COSO.

COSO Releases New Management Assessment Guidance to Smaller Companies for Internal Controls over Financial Reporting

During July 2006, COSO released new management assessment guidance to smaller companies for internal controls over financial reporting. The biggest “noise” from participants at the Securities and Exchange Commission’s (SEC’s) 2nd roundtable about Sarbanes-Oxley implementation issues that took place on May 10, 2006 is the concern over limited guidance for smaller public companies to ensure appropriate implementation. The release of such guidance from COSO will give CFOs and controllers at smaller public companies assurance that their concerns are not being ignored.

The guidance is comprised of three volumes of material:

Volume 1 – Executive Summary – See links in this section for COSO Executive Summary – Guidance for Smaller Companies and COSO FAQs – Guidance for Smaller Companies

Volume 2 – Guidance – Provides an overview of internal control over financial reporting in smaller businesses. Discusses the costs and benefits of internal control, how companies can meet the challenges of attaining cost-effective internal control, and provides other considerations for achieving further efficiencies.

Volume 3 – Evaluation Tools - Contains illustrative tools to assist management in evaluating internal control. Managers may use the illustrative tools in determining whether the company has effectively applied the principles.

Information on purchasing copies of volumes 2 & 3 along with other pertinent information about the guidance can be found on COSO’s website, www.coso.org. Special rates to purchase the guidance material are offered to members of founding organizations of COSO.

IMA joins its COSO partners in New York to release the greatly anticipated Framework
With recent heightened concern and focus on risk management, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released The Enterprise Risk Management - Integrated Framework on September 29, 2004. The Framework describes the essential components, principles, and concepts of enterprise risk management for all organizations, regardless of size, and provides boards of directors and management a clear roadmap for identifying risks, avoiding pitfalls, and seizing opportunities to grow stakeholder value.

To mark the release of the Framework, COSO held a media roundtable on September 29, 2004 at the Michelangelo Hotel in New York. The roundtable allowed COSO and its five members - IMA, the American Institute of Certified Public Accountants (AICPA), the American Accounting Association (AAA), Financial Executives International (FEI) and The Institute of Internal Auditors (IIA) - the opportunity to introduce the Framework to the public. IMA was represented at the event by IMA Chairman Larry White and Dennis Neider, a partner with PricewaterhouseCoopers currently serving on the COSO board of directors. The event provided White and Neider with the opportunity to speak with highly regarded members of the media on behalf of IMA about the Framework and the important role management accounting plays in risk management.

COSO recognized that while many organizations may be engaging in some aspects of enterprise risk management, there has been no common base of knowledge and principles to enable boards and senior management to evaluate an organization's approach to risk management and assist them in building effective programs to identify, measure, prioritize, and respond to risks. The Framework provides businesses as well as other organizations, for the first time, with a principles-based framework that will enable them to identify all the aspects that should be present in every company's enterprise risk program and how they can be successfully implemented.

Built on the foundation of COSO's Internal Control - Integrated Framework, being used by many American businesses to comply with the Sarbanes-Oxley Act requirements, this new Framework is expected to be widely accepted as the benchmark for dealing with business risk.

The Framework speaks to many of the issues currently facing organizations such as how an organization determines the right amount of risk for the value it is striving to create for stakeholders and how it responds to risk to best protect and enhance value. It also addresses the role of the board of directors, senior management, and other corporate officers in enterprise risk management. An accompanying document, Application Techniques, illustrates how effective enterprise risk management concepts and principles may be successfully applied in the competitive business environment.

COSO engaged PricewaterhouseCoopers in 2001 to lead the development of Enterprise Risk Management - Integrated Framework after concluding there was a need for a broadly recognized enterprise risk management framework. COSO appointed an advisory council with members from the five COSO organizations to work with PricewaterhouseCoopers in the development of the framework.

COSO Releases Exposure Draft for Guidance on Monitoring Internal Control
On June 5, 2008, The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released a three-volume exposure draft document: “Guidance on Monitoring Internal Control Systems”. Click here to read more.

The three-volume exposure draft includes an executive summary, main guidance and application techniques. The exposure draft is a follow-up to the discussion document released in 2007. COSO is particularly interested in feedback on the clarity and applicability of guidance in the exposure draft. Input from respondents will be used in developing the final publication, which is scheduled for release in the fall of 2008. A link to view the document and to submit comments can be found at http://www.coso.org. Comment letter are due for submission by August 15, 2008.