Corporate Compliance Report
Tish Preston
University of Phoenix
Introduction
In the wake of high-profile corporate scandals and subsequent regulatory legislation, reporting internal controls has become a requirement. These requirements have led to organizations viewing risk management as an area of vital importance. Best practice organizations have for years looked to the Committee of Sponsoring Organizations of the Treadway’s (COSO) Internal Control Integrated Framework as the standard to build a solid system of internal controls (Managing Risk, 2003). Formed in 1985, COSO is a voluntary and independent private sector organization that sponsored the National Commission of Financial Reporting. The National Commission was made up of various industry representatives who studied the underlying causes that lead to fraudulent financial reporting. The committee developed recommendations for public companies, independent auditors, regulators, and educational organizations, which are designed to improve “the quality of financial reporting through business ethics, effective internal controls, and corporate governance” (COSO, n.d., 1). Recognizing the need for organizations to evaluate risk management efforts, COSO developed a framework for Enterprise Risk Management (ERM) that British Petroleum (BP) Oil Company and other companies can use to establish strong internal controls.
Corporate governance is the monitoring of companies and management. In recent years, due to the negligence of upper management the government has formed regulatory groups to help monitor the process. The National Commission on Fraudulent Financial Reporting, more commonly referred to as the Treadway Commission, was formed in 1985 to inspect, analyze, and make recommendations i ...