On May 14, 2013, COSO released the 2013 update to the 1992 internal control framework that needs to be implemented by reporting entities no later than the end of calendar-year 2014.

The 2013 update to the original 1992 Framework should be helpful to organizations in their efforts to effectively and efficiently develop and maintain systems of internal control that can enhance the likelihood of achieving reporting entity objectives and adapt to changes in business and operating environments.

The requirement to consider the five components of internal control to assess the effectiveness of a system of internal control remains fundamentally unchanged.

The new Framework includes some enhancements and clarifications that are intended to ease use and application of the guidance.  One of the more significant enhancements is the formalization of fundamental concepts that were introduced in the original Framework.  The concepts now are written in terms of principles which are associated with the five components of internal control and which provide clarity for users in designing and implementing systems of internal control and for understanding requirements for effective internal control.

The 2013 Framework established 17 principles representing the fundamental concepts associated with each of the five internal control components.  Since the principles are drawn directly from the components, organizations can achieve effective internal control by applying all of the principles.

COSO believes that users should transition their applications and related documentation to the updated Framework as soon as is feasible.  As planned, COSO will continue to make the original Framework available during the transition period extending to December 15, 2014, after which COSO will consider the original Framework superseded by the 2013 update to the Framework.

If you have questions about this or any other matters, contact your Warren Averett partner, or any member of our SEC Practice Division at (813) 229-2321