COSO – TemplatesInternal Control Over External Financial Reporting:A Compendium of Approaches & Examples

Agenda• Snap Shot – New Framework• How to use Vol. #4 (ICEFR Template)?• Major Regulatory Changes Impacting ICEFR Vol. #4• Templates by Component• Where to get source documents

New Framework Principles

COSO – Health Check

Recorded COSO New Framework Overview at:http://web.ganconference.com/?page=REGISTER&meeting=6345633

info@avivaspectrum.com

Join 2013 COSO Implementation Group for FREE templates, advise and learn from others implementing this new framework.

Action item before implementation

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COSO Implementation

http://www.linkedin.com/groups/COSO-Implementation-4888186/about

Vol. #4 – How To Use It?• Intended Audience = Everyone! (Public, Private, Not-For-Profit

and Gov’t Entities)• How to read “Approaches” and “Examples” (pg.2)• Approaches = summary-level of activities for management• Examples = more specific illustrations to users on application of

each principle and may provide 1 or more points of focus (e.g. attributes of a principle)

• Appendix A - Index of All Examples by Topic (here are a few)1. Expectations for Governance Oversight2. Globalization (FCPA issues page 147!)

• Limitations of Illustrations• Vol #4 does not provide 100% of all examples you need for your

assessment of effective ICEFR (pg. 2)

Considerations of External F/S Reporting (Defining “types”)

Financial Statements Other

Annual & Interim FS Earnings Release

Selected Fin. Info. – Co. Website

Selected $ in Reg. Filings

Materiality Considerations

1. SEC guidance: Top 1 M of Staff Bulletin2. IASB (International Accounting Standards Board): provides a

definition in Paragraph QC11 conceptual framework for financial reporting 2010

Conclusion: Vol #4 notes US and International Standards for definition of materiality (for Mgmt). Both standards are almost identical.

FS - Assertions

Same as in prior COSO guidance materials:• Existence or Occurrence• Completeness• Rights & Obligations• Valuation or Allocation• Presentation & Disclosures

Note: AICPA, PCAOB & International Auditing & Assurance Standards Board agree on the above assertions.

Use of Templates & Documentation• Smaller entities: examples translate well to applications for

smaller entities!• Documentation – 2 Levels:

1. Management’s Documentation efforts must be at a level to state it has “sufficient evidence”.

2. External Auditor Attests on ICFR: Documentation should be at the level an auditor can leverage management’s understanding of Controls.

NOTE: COSO calls out HIGH USE of JUDGEMENT Mgmt. should document how such decisions were considered and the final decisions reached.

Ground Rules – Vol #4Most Effective way to read this volume:1. One Chapters for One COSO Component2. 1st Page of the chapter will always have a) Summary, b) List

of Principles and c) relevant approaches for applying principlesComponent Start page # of Pages

Control Environment

13 36 *

Risk Assessment 49 30 *

Control Activities 79 32

Information Communication

111 28

Monitoring Activities

139 17

* Most significant changes in vol. #4

Control Environment - Template

Where to find it?

Audit Evidence

Principles – 1 to 5 and 20 Attributes

Control Environment - KeyChanges

Risk Assessment - Template• Principles 6 to 9 = 27 attributes

4th quarter Materiality check

too!!!

Control Activities - Template• Principles 10 to 12 = 16 attributes

4th quarter/YE Validation IT Control test!!!

Information & Communication - Template• Principles 13 to 15 = 14 attributes

Information & Communication

Monitoring – Key Changes

Principles 16 to 17 = 10 attributes

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Company Overview/Forecast (2 mos. lead time)

SOX Aggregate Impact(3 mos. lead time)

Finance & IT Deliverables Impact assessment(3-4 mos. lead time)

2014 Implementation Lead Time

Control Compliance Analysis

(“CCA”)

Info@avivaspectrum.com

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MonitoringGuidance (2008)(over 400 pages

in 3 vol. set)

AICPA (2008)Audit Committee Toolkit

(Approx. 7 templates will change)

New 2013COSO (over 500 pages

then 150+ for ICFR guidance)

Where to get other SOURCE Documents?

2013 IllustrativeTools (145 pages)

Action Items before implementation!

ACTION ITEM: Connect with Aviva Spectrum via Slideshare (Hyperlink to this and other ppt files)

Sonia Luna, President, CEOSonia.Luna@AvivaSpectrum.com

700 S. Flower Street #1100Los Angeles, CA 90017P: (213) 250-5700

Contact Information

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