Coso Framework

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Enterprise Risk Management — Integrated Framework
Executive Summary
September 2004

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Committee of Sponsoring Organizations of the Treadway Commission (COSO) Oversight COSO Chair American Accounting Association American Institute of Certified Public Accountants Financial Executives International Institute of Management Accountants The Institute of Internal Auditors Representative John J. Flaherty Larry E. Rittenberg Alan W. Anderson John P. Jessup Nicholas S. Cyprus Frank C. Minter Dennis L. Neider William G. Bishop, III David A. Richards

Project Advisory Council to COSO
Guidance Tony Maki, Chair Partner Moss Adams LLP James W. DeLoach Managing Director Protiviti Inc. John P. Jessup Vice President and Treasurer E. I. duPont de Nemours and Company Tony M. Knapp Senior Vice President and Controller Motorola, Inc. Douglas F. Prawitt Professor Brigham Young University

Mark S. Beasley Andrew J. Jackson Professor Senior Vice President of North Carolina State University Enterprise Risk Assurance Services American Express Company Jerry W. DeFoor Vice President and Controller Protective Life Corporation Steven E. Jameson Executive Vice President, Chief Internal Audit & Risk Officer Community Trust Bancorp, Inc.

PricewaterhouseCoopers LLP
Author Principal Contributors Richard M. Steinberg Former Partner and Corporate Governance Leader (Presently Steinberg Governance Advisors) Frank J. Martens Senior Manager, Client Services Vancouver, Canada Miles E.A. Everson Partner and Financial Services Finance, Operations, Risk and Compliance Leader New York Lucy E. Nottingham Manager, Internal Firm Services Boston

FOREWORD
Over a decade ago, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued Internal Control – Integrated Framework to help businesses and other entities assess and enhance their internal control systems. That framework has since been incorporated into policy, rule, and regulation, and used by thousands of enterprises to better control their activities in moving toward achievement of their established objectives. Recent years have seen heightened concern and focus on risk management, and it became increasingly clear that a need exists for a robust framework to effectively identify, assess, and manage risk. In 2001, COSO initiated a project, and engaged PricewaterhouseCoopers, to develop a framework that would be readily usable by managements to evaluate and improve their organizations’ enterprise risk management. The period of the framework’s development was marked by a series of high-profile business scandals and failures where investors, company personnel, and other stakeholders suffered tremendous loss. In the aftermath were calls for enhanced corporate governance and risk management, with new law, regulation, and listing standards. The need for an enterprise risk management framework, providing key principles and concepts, a common language, and clear direction and guidance, became even more compelling. COSO...
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