MCAA U3DB initial

MCAA U3DB Initial
Student’s Name
Institutional Affiliation

Committee of Sponsoring Organizations of the Treadway Commission (COSO)
The Committee of Sponsoring Organizations of the Treadway Commission abbreviated as COSO represents a joint initiative that is designed to fight corporate fraud in the United States. The initiative was established by a five sector organizations that were determined to provide the executive management and other governance firms with information related to business ethics, financial reporting, enterprise risk, internal controls, and key aspects of organizational governance (Graham, 2015). COSO was developed to combat the underlying questionable financial practices and corrupt practices that occurred in the mid-1970s in the United States Securities and Exchange Commission (SEC). COSO provides a common internal control system where companies access their internal control systems. Ideally, the COSO framework became more prevalent in 2004 after the release of the Sarbanes Oxley Act of 2002. The framework comprises five core components including the control environment, the information system, the risk assessment process, control activities, and the monitoring of controls.
In the component of the control environment, various elements are evident in the Boyar Company. For instance, the company is structured as a functional company. Following the various divisions in the company, the management makes sure that the internal controls are uniforms in all the three divisions therein (Moeller, 2013).

The component of information system entails the method of passing information and the communication network in the company. In Boyar Company, there are problems regarding proper communication, financial reporting, limitations in cross-functional coordination, accountability problem, and the aspects of developing new products. The internal controls in the information system are poor in Boyar Company. The component of risk assessment is evident in Boyar Company mainly by the presence of both the internal and the external auditors in the company. Besides, auditors engage in risk assessment during the audit process. In the component of control activities, the balance sheet of Boyar Company shows that the company owns some assets with the subsequent security for the assets. The existence of auditors is relevant in the review and verifying the operations in the company. The mention of financial reporting shows that there is a reconciliation of financial report (Moeller, 2013). Lastly, the component of monitoring is evident in Boyar Company by the mention of both the internal and the external auditors. Auditors monitor the internal controls in an organization and provide strategies to improve weak controls.

References
Graham, L. (2015). Internal control audit and compliance: Documentation and testing under the new COSO framework. Hoboken, New Jersey : Wiley.
Moeller, R. R. (2013). Executive’s guide to COSO internal controls: Understanding and implementing the new framework. Hoboken: John Wiley.