The exhilaration of witnessing a company’s growth and success, fueled by the tireless dedication of management and employees, is undeniable. As rewarding as that may be, it can be equally tragic when a company falters or the endeavor fails, often stemming from unreliable financial reporting or fraudulent activities due to weak or absent internal controls.

Internal controls are the rules, mechanisms, and procedures a company implements to ensure the integrity of its financial and accounting information, promote accountability, and prevent and detect fraud. Internal controls can help companies operate more efficiently, improve the accuracy and timeliness of financial reporting and assist companies in complying with laws and regulations. The Committee of Sponsoring Organizations of the Treadway Commission (COSO), which was established more than 30 years ago, is dedicated to providing thought leadership regarding the topic of internal controls, including through the development of a framework designed to help businesses establish, assess, maintain, and enhance their internal control (including over financial reporting). COSO’s internal control framework is not a legal mandate but a best practice most U.S. public companies use. The internal control framework established by COSO covers the control environment, risk assessment, existing control activities, information and communication related to controls, and ongoing monitoring activities.

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