A Survey on Firms’ Implementation of COSO’s 2013 Internal Control – Integrated Framework

• In Event: AIS Potpourri

Abstract

Many firms began implementing COSO’s 2013 Internal Control – Integrated Framework in 2014. We survey accounting professionals at these firms to examine views concerning the framework and its impact on key areas related to internal controls. Our analyses provide insight into five key topics important to the framework. First, we find that respondents view the 2013 Framework and its 17 principles as an overall improvement to the 1992 Framework. However, our results suggest that firms’ benefits and costs from implementing the framework were mitigated because the firms already had effective internal control structures in place. Second, we provide evidence that respondents view the 17 principles as a set of rules for achieving effective internal controls, but they believe the principles still provide adequate flexibility and allow for sufficient management judgment. Third, 87.2 percent of respondents indicate changes in at least one of the five components of internal controls, but no significant changes to XBRL and fraud risk processes. Fourth, we provide evidence that some firms are applying the framework to objectives outside of financial reporting. Last, we find greater expected effort, but not fees, by the firms’ external auditors, but we find no changes in firms’ expected internal control deficiencies.

Authors

• Bradley Lawson, Oklahoma State University

• Leah Elena Muriel, Oklahoma State University

• Paula Renee Sanders, Oklahoma State University