Executive's Guide to COSO Internal Controls: Understanding and Implementing the New Framework

CHAPTER 11

COSO Legal, Regulatory, and Compliance Objectives

WE HAVE TAKEN THE REVSED COSO internal controls framework, shown in Exhibit 3.2, and have rotated this cubical framework to better describe the three-dimensional, interconnected nature of this internal control framework model. Exhibit 9.1 looked at another view of this important framework model, and this chapter looks at legal standards, and regulatory compliance controls that are important elements of the revised internal controls framework.

These internal controls have had an impact on all other dimensions of both the original and the newly revised COSO internal control framework. For example, compliance controls are important for many aspects of the control environment and certainly affect many internal control activities. Looking at another dimension of the framework, compliance controls are crucial in every level of the enterprise.

IMPORTANCE OF ENTERPRISE COMPLIANCE CONTROLS

Members of senior management and their boards of directors develop strategies and set the rules for operating in compliance with laws and regulations for their business operations. However, whether compliance here includes paying taxes, operating in accordance with human resource salary and benefit agreements, correctly labeling and advertising products, following local regulations, or following safety and environmental standards, enterprises across almost every industry face a wave of rules and regulations that require their compliance with ...