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Thread Title: External Auditor forcing us to move to new 2013 COSO
Created On Thursday August 22, 2013 10:04 AM
  External Auditor forcing us to move to new 2013 COSO
  External Auditor forcing us to move to new 2013 COSO


musashi44


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Thursday August 22, 2013 10:04 AM

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Our external auditors are saying we need to switch to the new COSO format by the end of 2014. From my readings this is voluntary, but if you do not you have to state which COSO you are using in your reporting.

Thoughts?

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Paul_M


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Monday August 26, 2013 12:15 PM

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Use of the 2013 Framework isn’t voluntary. COSO announced that it “will continue to make available its original Framework during the transition period extending to December 15, 2014, after which time COSO will consider it as superseded by the 2013 Framework.” (COSO Press Release, May 14, 2013)

SEC guidance to management states that “Under the Commission’s rules, management’s annual assessment of the effectiveness of ICFR must be made in accordance with a suitable control framework’s definition of effective internal control.” The SEC cited the 1992 COSO Framework and several others “as an example of a suitable framework.” (Securities and Exchange Commission Securities Act Release No. 33-8810, June 27, 2007) So if the 1992 Framework is superseded, you won’t have a “suitable control framework.”

You might also be interested in remarks by Paul Beswick, Chief Accountant at the SEC, in a speech at the 32nd Annual SEC and Financial Reporting Institute Conference, Pasadena, CA, 5/30/13:

"I understand that COSO intends to supersede their 1992 Framework as of December 15, 2014, and we expect there will be questions about whether the SEC will provide management with any transition or implementation guidance to change from the existing framework to the new framework. COSO has publicly stated its belief that “users should transition their applications and related documentation to the updated Framework as soon as is feasible under their particular circumstances” and that “the key concepts and principles embedded in the original framework are fundamentally sound and broadly accepted in the marketplace, and accordingly, continued use of the 1992 framework during the transition period (May 14, 2013 to December 15, 2014) is acceptable.”

SEC staff plans to monitor the transition for issuers using the 1992 framework to evaluate whether and if any staff or Commission actions become necessary or appropriate at some point in the future. However, at this time, I’ll simply refer users of the COSO framework to the statements COSO has made about their new framework and their thoughts about transition."

KPMG has noted “It is our understanding that there will be a period of time beyond December 15, 2014, where the SEC staff does not intend to question the use of the 1992 Framework by registrants. While it is uncertain whether the SEC will ultimately set a transition date, questions as to why a registrant continues to use a superseded framework become more legitimate with the passage of time.” (KPMG Defining Issues, July 2013)

Whichever version you plan to use in 2013, the COSO Board “believes that the continued use of the original Framework during the transition period (May 14, 2013 to December 15, 2014) is appropriate. During this period, the COSO Board believes that organizations reporting externally should clearly disclose whether the original Framework or the 2013 Framework was utilized.” (COSO Press Release, May 14, 2013)





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DISCUSSIONS > IIA GENERAL DISCUSSION AREA [ REFRESH ]
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