DISCUSSION 1

Discussion 1



Discussion 1

The COSO Framework

COSO is the abbreviation of Committee Of Sponsoring Organizations. As an organization, its primary goal is to offer guidance and thought leadership in three main fields - fraud deterrence, enterprise risk management, and internal control (Moeller, 2007; Bowling & Rieger, 2005). The COSO Framework explains the key concepts that are connected to segregation of duties, accounting records, supervision, access control, transaction authorization, and independent verification. These concepts are described below:

Independent Verification

The primary goal of independent verification is to assess whether the tasks carried out by other functions within the process are accurate and complete. In order to be effective, it is imperative that independent verification takes place at crucial points in the process (Hall, 2013; (Moeller, 2007)). A big advantage of independent verification is that it is highly effective in assessing the completeness and accuracy of various functions in the overall process. However, one of its key drawbacks is that it serves little purpose when ERP systems take the help of OLTP (Hall, 2013). The use of an independent paymaster for distributing checks is an ideal example of independent verification.

Transaction Authorization

The primary goal of this control involves ensuring that only those transactions are processed that are valid (Hall, 2013; Panko, 2006). The main benefit of transaction authorization is that it effectively eliminates the chances of any fraudulent transactions. However, a major drawback of the control is that the verification and authorization process is lengthy and consumes a considerable amount of time, thereby delaying the transaction process (Hall, 2013; Panko, 2006). An ideal example is verifying time cards submitted to an organization to determine whether or not a particular employee still works for it.

Segregation of Duties

This particular control helps to ensure that no transaction is entirely processed by a single department or individual (Bowling & Rieger, ...