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Enterprise Risk Management Framework released to assist companies of all sizes identify, manage risks.

In late Sept., the Committee of Sponsoring Organizations of the Treadway Commission, of which the AICPA is a member, released Enterprise Risk Management--Integrated Framework. The framework describes the essential components, principles and concepts of enterprise risk management for all organizations, regardless of size. With heightened concern and focus on risk management, the framework offers boards of directors and managements a clear roadmap for identifying risks, avoiding pitfalls and seizing opportunities to grow stakeholder value.

COSO recognizes that while many organizations may be engaging in some aspects of enterprise risk management, there has been no common base of knowledge and principles to enable boards and senior management to evaluate an organization's approach to risk management and assist them in building effective programs to identify, measure, prioritize and respond to risks. The publication provides businesses as well as other organizations, for the first time, with a principles-based framework that will enable them to identify all the aspects that should be present in every company's enterprise risk program and how they can be successfully implemented.

Built on the foundation of COSO's Internal Control--Integrated Framework, being used by many American businesses to comply with the Sarbanes-Oxley Act requirements, this new framework is expected to be widely accepted as the benchmark for dealing with business risk. It also addresses the role of boards of directors, senior management and other corporate officers in enterprise risk management. An accompanying document, Application Techniques, illustrates how effective enterprise risk management concepts and principles may be successfully applied in the competitive business environment.

COSO is a voluntary private-sector organization dedicated to improving the quality of financial reporting through business ethics, effective internal controls, and corporate governance. Besides the AICPA, the other members of COSO are the American Accounting Association, Financial Executives International, the Institute of Management Accountants and The Institute of Internal Auditors.
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Title Annotation:Committee of Sponsoring Organizations of the Treadway Commission
Publication:CPA Letter
Article Type:Book Review
Geographic Code:1USA
Date:Nov 1, 2004
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