Group Discussion:

COSO’s Internal Control

Integrated Framework
Group 2
Azzelya Bara M. S. - 1906285900
Leyna Lubaba - 1906388344
Ng Drago Kheng - 1906358240
Revanza Auditya - 1906389246
Shafa Athaya Azalia - 1906388722
Tiara Indah Sari - 1906358644
 Table of Contents

01 02 03
The relationship between Reasons for the need for an The relationship between
objectives & components of Internal Control framework AIS and COSO’s internal
COSO’s internal control control framework
framework and 3
dimensional cube of the
framework

04 05
Requirements for effective Conclusion
internal control
INTRO
Committee of Sponsoring
Organization of the Treadway
Commission ‘COSO’
A joint initiative to combat corporate fraud
and dedicated to guide executive
management and government entities in
relevant aspects of organizational
governance, business ethics, internal
control, business risk management, fraud
and financial reports.
Internal Control
A process, affected executive
management and government entities in
relevant aspects of organizational
governance, business ethics, internal
control, business risk management, fraud
and financial reports.
01
The relationship between
objectives & components
of COSO’s internal control
framework and 3
dimensional cube of the
framework
The Relationship
A direct relationship exists between ;

Objectives → which are what an entity strives to achieve,

Components → which represent what is required to achieve the objectives, and
The organizational structure of the entity (the operating units, legal entities, and other). The relationship can
be depicted in the form of a cube.

● The three categories of objectives are

represented by the columns,
● The five components are represented by
the rows,
● An entity’s organizational structure is
represented by the third dimension.
02
Reasons for the need for an
Internal Control framework
Internal Control

Internal control is a process, effected by an entity’s board of directors,

management, and other personnel, designed to provide reasonable
assurance regarding the achievement of objectives relating to
operations, reporting, and compliance. Internal control helps entities
achieve important objectives and sustain and improve performance. To
achieve those objectives, the entity will develop systems of internal
control that adapt to changing business and operating environments
Output

Ensure completeness of the plan information

Reduces risk loss of assets

Reliability of financial statements and operation of the plan in

conformity with the provisions of the applicable law and policies
03
The relationship between
AIS and COSO’s internal
control framework
Accounting Information System

There are 3 Principles of the COSO Internal

Accounting information system is a system that collect, Control Model that apply to the information and
records, stores, processes, summarize, and communicate communication process:
information about an organization. This includes:
1. The organization obtains or generates
1. Understanding how transactions are initiated, data are and uses relevant, quality information to
captured, files are accessed and updated, data are support the functioning of internal
processed, and information is reported control.
2. Communication must occur internally and externally 2. The organization internally
communicates information, including
There are six components of an AIS:
objectives and responsibilities for internal
1. People, control, necessary to support the
2. Procedures and instructions, functioning of internal control.
3. Data, 3. The organization communicates with
4. Software, external parties regarding matters
5. Information technology infrastructure, affecting the functioning of internal
6. Internal controls and security measures control.
 Accounting Information
A well-designed AIS can add value to an organization by System
Improving the internal control structure.
maintained

Internal Control

COSO

Source: HUNG, T. T., THIEN, N. H., & TRUNG, N. H. (2017, September 16). Relationship between accounting information system and internal control system. Retrieved March
16, 2021, from http://tapchicongthuong.vn/bai-viet/relationship-between-accounting-information-system-and-internal-control-system-27495.htm
04
Requirements for effective
internal control
Effective Internal Control

Each of the five components and relevant principles is present and

functioning

Present
Refers to the determination that the
components and relevant principles exist
in the design and implementation of the
system of internal control to achieve
specified objectives.
Functioning
Refers to the determination that the
components and relevant principles
continue to exist in the operations and
conduct of the system of internal control
to achieve specified objectives.
Effective Internal Control

The five components operate together in an integrated manner

Operating together
Refers to the determination that all five components collectively reduce, to an acceptable
level, the risk of not achieving an objective.
Conclusion

● Internal control helps entities achieve important

objectives and sustain and improve
performance.
● A well-designed AIS can add value to an
organization by Improving the internal control
structure
● For make effective internal control, there are
two requirement. First, each component and
principle is present and functioning. Second,
those component operate together.
Thank You
Any Question?
References
Romney. (20200805). Accounting Information Systems,
Global Edition, 15th Edition. [VitalSource Bookshelf 9.4.3].
Retrieved from vbk://9781292353289

https://en.wikipedia.org/wiki/Committee_of_Sponsoring
_Organizations_of_the_Treadway_Commission