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This post addresses COSO internal controls & related issues.

There are different internal control models. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) model is one that is widely accepted by companies in the United States. This model is discussed in Hunton, Bryant, and Bagranoff. Please review each component and share your thoughts with examples.

"Pricing is a very important factor, because information systems are supported to be more efficient and if the system costs more than the company gains over the long-term the system can be a failure ." is right on target. It also important for a company to make sure whether it is worth the effort before it embarks on a project.

To build on the topic I raised in a previous post (above), Internal Controls are one of the most important components of an Accounting Information System. Implementing Internal Controls involves evaluating the expected costs and the expected benefits. Bagradoff, Simikin, and Strand illustrate a cost-benefit analysis of payroll validation control procedure.

Share your organization's experience concerning components considered during cost-benefit analyses of similar control procedures?

Solution Preview

Here is a resource for the five components discussed in the COSO model:

The main point to consider when you read through the information regarding the components is that the five component model is comprehensive - which is exactly what COSO intended. By integrating the control environment, risk assessment, control activities, information and communication and monitoring into the framework, it is a structured model that applies to all organizations. The model specifically places the control environment first and this was intentional by COSO. Because the control environment sets the precedent for the remainder of the internal control activities, it is seen as having the most significance within the organization. If the environment is strong, chances are higher that the internal control activities will be more regulated and stronger.

The risk assessment and control activities were actually designed to work together. Based on the risk assessment, the control activities are designed. ...

Solution Summary

This solution explains COSO internal controls and related issues. All questions asked in the scenario are addressed in the solution.