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COSO ERM framework

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1. Discuss the COSO ERM framework, and how it includes and expands on the internal controls required by Sarbanes-Oxley Act. Discuss the differences between Internal-Control Integrated Framework and COSO ERM framework. (references)
2. To use ERM to evaluate an accounting information system, the team must recognize the importance of the internal environment in a company. Discuss what elements are important when identifying the internal environment in a company. (provide References)

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Discuss the COSO ERM framework, and how it includes and expands on the internal controls required by Sarbanes-Oxley Act.

Several recent highprofile business scandals and failures have caused investors, politicians, and
businesses to demand enhanced corporate governance and risk management techniques. This
demand is seen most clearly in the SarbanesOxley Act of 2002. Public companies are now
required to test and certify their internal controls over financial reporting.

COSO's ERM is a relatively new management technique and differs across companies and industries. The goal of the ERM
framework is to provide companies with key principles and concepts, a common language, and clear direction and guidance regarding the management enterprise risks. Additionally, companies may look to this ERM framework both to satisfy their internal control needs and move toward a fuller risk management process. This ERM framework incorporates adequate
financial internal controls as a component of enterprise risk management.

"ERM is a process, effected by an entity's board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives."
ERM is based on the premise that every entity exists to provide value for its stakeholders. Basic business principles suggest that the greater the risk associated with a decision, the greater the potential return that ...

Solution Summary

Discuss the COSO ERM framework, and how it includes and expands on the internal controls required by Sarbanes-Oxley Act.

See Also This Related BrainMass Solution

COSO Enterprise Risk Management Framework

Which element of the COSO enterprise risk management framework is most closely associated with each of the following?

a) ALG Corporation bonds key employees.
b) Based on previous experience, TRG Corporation's management believes the risk of inventory shortages is moderate.
c) BPC Corporation implements a profit-sharing plan as a way to motivate managers to control costs.
d) BRN Corporation's board of directors hires a consultant to explain ERM.
e) CNV Corporation's managers accept the risk of stock price decreases.
f) DTI Corporation holds quarterly staff lunches where employees discuss how they manage risk.
g) EIV Corporation's president organizes monthly meetings for managers to discuss books and articles related to ERM.
h) FLM Corporation operates manufacturing plants on three continents.
i) FPO Corporation follows a top-down model for strategic planning.
j) HRP Corporation's internal audit department assesses and tracks the effectiveness of its ERM plan.
k) Management at CNV Corporation determines the probability of a decrease in stock value is very high.
l) MGG Corporation occasionally hires a consultant to provide feedback on its ERM plan.
m) RCH Corporation's enterprise risk management department prepares and distributes a monthly ERM newsletter.
n) SSO Corporation reviews and revises its strategic plan annually.
o) TRG Corporation's managers want to avoid inventory shortages.
p) WRL Corporation does not use data encryption in its wireless network.

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