*Internal Control (CRIME)

1. Control Environment – EBOCA

2. Risk Assessment – SAFR

3. Information and Communication – OIE

4. Monitoring – SOD

5. Existing Control Activities – CATP

Copyright © 2017 TAPA Institute. All rights reserved. 1

The Committee of Sponsoring Organizations of the

Treadway Commission. Voluntary, private sector

organization originally formed in 1985. Dedicated to

improving the quality of financial reporting through

business ethics, effective internal controls and

corporate governance. There are three objectives an

organization will achieve: effective & efficient

Operations; reliable financial Reporting; and

Compliance with laws/regulations (ORC).

COSO – Internal Control Framework

Control Environment

EBOCA

– Commitment to Ethics & Integrity –

– Board Independence & Oversight –

– Organizational Structure –

– Commitment to competence –

– Accountability –

( C R I M E )

Wh a t i s COSO – I n te rn a l C o n t ro l ?

The Committee of Sponsoring Organizations of the

Treadway Commission. Voluntary, private sector

organization originally formed in 1985. Dedicated to

improving the quality of financial reporting through

business ethics, effective internal controls and

corporate governance.

COSO – Internal Control Framework

Risk Assessment

SAFR – Specify Objectives: risk identification and

assessment-

– Identify & Access changes to specify objectives –

– Consider Potential of Fraud: fraud triangle:

pressure, opportunities and rationalizations –

– Identify and analyze Risks for management and

response –

( C R I M E )

Wh a t i s COSO – I n te rn a l C o n t ro l ?

The Committee of Sponsoring Organizations of the

Treadway Commission. Voluntary, private sector

organization originally formed in 1985. Dedicated to

improving the quality of financial reporting through

business ethics, effective internal controls and

corporate governance.

COSO – Internal Control Framework

Information and Communication

OIE – Obtain and use Information –

– Internally Communicate Information –

– Communicate through External parties –

( C R I M E )

Wh a t i s COSO – I n te rn a l C o n t ro l ?

The Committee of Sponsoring Organizations of the

Treadway Commission. Voluntary, private sector

organization originally formed in 1985. There are three

objectives an organization will achieve: effective &

efficient Operations; reliable financial Reporting; and

Compliance with laws/regulations (ORC)

COSO – Internal Control Framework

Monitoring

( C R I M E )

Wh a t i s COSO – I n te rn a l C o n t ro l ?

SOD

– Separate and/or Ongoing evaluations –

– Communication of Deficiencies –

The Committee of Sponsoring Organizations of the

Treadway Commission. Voluntary, private sector

organization originally formed in 1985. Dedicated to

improving the quality of financial reporting through

business ethics, effective internal controls and

corporate governance.

COSO – Internal Control Framework

Existing Control Activities

( C R I M E )

Wh a t i s COSO – I n te rn a l C o n t ro l ?

CATP

– Select & develop Control Activities –

– Select & develop Technology controls –

– Deploy through Policies and procedures –

*Enterprise Risk Management (GOPRO)

1. Governance and Culture – DOVES

2. Strategy and Objective- Setting – SOAR

3. Performance – VAPIR

4. Review and Revision – SIR

5. Information, Communication, and Reporting (Ongoing) – TIP

Copyright © 2017 TAPA Institute. All rights reserved. 1

Wh a t i s E RM – E n te rpri se Ri sk Ma n a g e me n t?

ERM – Enterprise Risk Management

(GOPRO)

Governance and Culture

DOVES – Defines Desired Culture –

– Exercises Board Oversight –

– Demonstrates Commitment to Core Values

–

– Attracts, Develops, and Retains Capable

Individuals (Employees) –

– Establishes Operating Structure –

Enterprise risk management is the culture,

capabilities, and practices, integrated with

strategy-setting and performance, that

organizations rely on to manage risk in creating,

preserving, and realizing value.

ERM – Enterprise Risk Management

Strategy and Objective-Setting

SOAR – Evaluates Alternative Strategies –

– Formulates Business Objectives –

– Analyzes Business Context –

– Defines Risk Appetite –

(GOPRO)

Wh a t i s E RM – E n te rpri se Ri sk Ma n a g e me n t? Enterprise risk management is the culture,

capabilities, and practices, integrated with

strategy-setting and performance, that

organizations rely on to manage risk in creating,

preserving, and realizing value.

ERM – Enterprise Risk Management

Performance

VAPIR – Develops Portfolio View –

– Assesses Severity of Risk –

– Prioritizes Risk –

– Identifies Risks (Events) –

– Implements Risk Responses –

(GOPRO)

Wh a t i s E RM – E n te rpri se Ri sk Ma n a g e me n t? Enterprise risk management is the culture,

capabilities, and practices, integrated with

strategy-setting and performance, that

organizations rely on to manage risk in creating,

preserving, and realizing value.

ERM – Enterprise Risk Management

Review and Revision

(GOPRO)

Wh a t i s E RM – E n te rpri se Ri sk Ma n a g e me n t?

SIR – Assesses Substantial Change –

– Pursues Improvement in Enterprise Risk

Management –

– Reviews Risk and Performance –

Enterprise risk management is the culture,

capabilities, and practices, integrated with

strategy-setting and performance, that

organizations rely on to manage risk in creating,

preserving, and realizing value.

ERM – Enterprise Risk Management

Information, Communication,

and Reporting (Ongoing)

(GOPRO)

Wh a t i s E RM – E n te rpri se Ri sk Ma n a g e me n t?

TIP – Leverages Information and Technology –

– Communicates Risk Information –

– Reports on Risk, Culture, and Performance –

Enterprise risk management is the culture,

capabilities, and practices, integrated with

strategy-setting and performance, that

organizations rely on to manage risk in creating,

preserving, and realizing value.

COSO Enterprise Risk Management- Integrating with Strategy and Performance

7ERM Framework for Boards and Management in entities

Source : COSO Enterprise Risk Management-Integrating with Strategy and Performance 2017

COSO Enterprise Risk Management -Integrated Framework is now

COSO Enterprise Risk Management- Integrating with Strategy and Performance

Source : COSO Enterprise Risk Management-Integrating with Strategy and Performance 2017

ERM Framework for Boards and Management in entities

2017 GO PRO

2004 IS EAR AIM

Internal Environment

Objective Setting

Governance and Culture

Strategy and Objective Setting

Event Identification Risk Assessment

Risk Response Performance

Control Activities Monitoring

Information and Communication Information Communication and Reporting

Review and Revision

COSO Enterprise Risk Management- Integrating with Strategy and Performance

9Source : COSO Enterprise Risk Management -Integrated Framework, 2004 COSO Enterprise Risk Management-Integrating with Strategy and Performance, 2017

2004- Objectives of ERM

❖Strategic

❖Operations

❖Reporting

❖Compliance

2017- Role of ERM

COSO Enterprise Risk Management- Integrating with Strategy and Performance

ERM Framework for Boards and Management in entities

Source : COSO Enterprise Risk Management -Integrated Framework, 2004 COSO Enterprise Risk Management-Integrating with Strategy and Performance, 2017

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