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Observed effectiveness of the COSO 2013 framework

Observed effectiveness of the COSO 2013 framework This paper aims to examine the effectiveness of the Committee of Sponsoring Organization’s 2013 Framework, by investigating how the number of auditor-reported material weaknesses compares for Early-, Timely- and Late-adopters of the framework, and how the number of auditor-reported material weaknesses changed for Early- and Timely-adopters following their adoption of the framework.Design/methodology/approachThe paper uses regression analyses based on a sample of US firms subject to Sarbanes-Oxley Act Section 404(b).FindingsTimely-adopters of the 2013 Framework continued to exhibit fewer instances of auditor-reported material weaknesses than Late-adopters, even though they had a marginal increase in the number of auditor-reported material weaknesses, in the post-2013 Framework period.Practical implicationsThe findings suggest that the effectiveness of the 2013 Framework may lie in the iterative nature of the internal control process, and as firms remedy deficiencies they or their auditors identify, they will continuously improve the effectiveness of their internal control systems.Originality/valueUnlike existing literature, this paper uses data from the pre-2013 Framework, transition and post-2013 Framework periods to examine changes in the number of auditor-reported material weaknesses, thus differentiating between Early-, Timely- and Late-adopters of the 2013 Framework. It also shows the effect of adopting the 2013 Framework on the number of auditor-reported material weaknesses. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting & Organizational Change Emerald Publishing

Observed effectiveness of the COSO 2013 framework

Udeh, Ifeoma
Journal of Accounting & Organizational Change , Volume 16 (1): 15 – Apr 20, 2020
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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1832-5912
DOI
10.1108/jaoc-07-2018-0064
Publisher site
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Abstract

This paper aims to examine the effectiveness of the Committee of Sponsoring Organization’s 2013 Framework, by investigating how the number of auditor-reported material weaknesses compares for Early-, Timely- and Late-adopters of the framework, and how the number of auditor-reported material weaknesses changed for Early- and Timely-adopters following their adoption of the framework.Design/methodology/approachThe paper uses regression analyses based on a sample of US firms subject to Sarbanes-Oxley Act Section 404(b).FindingsTimely-adopters of the 2013 Framework continued to exhibit fewer instances of auditor-reported material weaknesses than Late-adopters, even though they had a marginal increase in the number of auditor-reported material weaknesses, in the post-2013 Framework period.Practical implicationsThe findings suggest that the effectiveness of the 2013 Framework may lie in the iterative nature of the internal control process, and as firms remedy deficiencies they or their auditors identify, they will continuously improve the effectiveness of their internal control systems.Originality/valueUnlike existing literature, this paper uses data from the pre-2013 Framework, transition and post-2013 Framework periods to examine changes in the number of auditor-reported material weaknesses, thus differentiating between Early-, Timely- and Late-adopters of the 2013 Framework. It also shows the effect of adopting the 2013 Framework on the number of auditor-reported material weaknesses.

Journal

Journal of Accounting & Organizational Change – Emerald Publishing

Published: Apr 20, 2020

Keywords: Internal controls; COSO; 2013 Framework; Material weaknesses

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