Committee of Sponsoring Organizations of the Treadway Commission - PDF document

11/9/2017 Committee of Sponsoring Organizations of the Treadway Commission 11/9/2017 1 COSO was organized in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, an independent private-sector initiative that studied the causal factors that can lead to fraudulent financial reporting. It also developed recommendations for public companies and their independent auditors, for the Securities and Exchange Commission (SEC) and other regulators, and for educational institutions. 11/9/2017 2 1

11/9/2017 The National Commission was sponsored jointly by five major professional associations headquartered in the United States: • The American Accounting Association (AAA), • The American Institute of Certified Public Accountants (AICPA), • Financial Executives International (FEI), • The Institute of Internal Auditors (IIA), • The National Association of Accountants (now the Institute of Management Accountants [IMA]). 11/9/2017 3 The first chairman of the National Commission was James C. Treadway, Jr., Executive Vice President and General Counsel, Paine Webber Incorporated and a former Commissioner of the U.S. Securities and Exchange Commission. Hence, the popular name “Treadway Commission”. 11/9/2017 4 2

11/9/2017 The committee is dedicated to providing: • Leadership through the development of frameworks, • Guidance on enterprise risk management, • Internal control, • Fraud deterrence. 11/9/2017 5 The Green Book Standards for Internal Control in the Federal Government Published by the Government Accountability Office (GAO) on September 10, 2014 11/9/2017 6 3

11/9/2017 11/9/2017 7 INTERNAL CONTROLS PROGRAM 11/9/2017 8 4

11/9/2017 Internal Control Program • Documentation of policies • Documentation of processes • Improve internal control processes Town Staff • Monitor internal controls • Engaged to review at least one major component within the Town on a regular basis Internal Control • Reports Findings and Recommendations to City Management Consultant • Test strength of internal control processes • Recommends improvements to staff Town’s External Auditors 11/9/2017 9 Internal Control Program • Airport Review of Major • Conference Centre • Addison Athletic Club Component Unit • Treehouse EXAMPLE Bi-annual • Police Review of • Fire Departments • Municipal Courts Systematic EXAMPLE Review of • Building Inspections and Permitting Selected • Utility Billing Processes 11/9/2017 10 5

11/9/2017 Internal Control Program Development of Plan Creation of Schedule 11/9/2017 11 Internal Control Program January – March 2018 April – September 2018 October – December 2018 Staff develops internal Staff engages consultant Town auditors test and control schedule to review controls review controls 11/9/2017 12 6

11/9/2017 Internal Control Program 11/9/2017 13 7