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Board Oversight and Professional Judgment: COSO's Newest Thought Paper

On March 1, 2012 the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released a thought paper entitled, Enhancing Board Oversight: Avoiding Judgment Traps and Biases

As noted in COSO's press release:  

This thought paper, developed by KPMG LLP, the audit, tax and advisory firm, and Brigham Young University professors Steven M. Glover, CPA, Ph.D. and Douglas F. Prawitt, CPA, Ph.D., details a five-step judgment process that board members and others can use to overcome common pitfalls and mitigate the effects of judgment bias. 

The judgment process is based on KPMG’s Professional Judgment Framework, developed in collaboration with Glover and Prawitt. The framework, among other things, enables individuals to identify where and when the quality of judgments tends to be threatened by predictable, systematic judgment traps and biases. Awareness of such traps and biases can enable directors to improve the consistency and quality of their own judgments and enable them, in their oversight role, to constructively improve the judgments of management. 
 

Of note: the above-referenced publication, released by COSO on March 1, is not 'guidance' per se, but has been released as a COSO 'thought paper.' As further described in COSO's press release

The paper is another of a series of COSO’s thought papers through which COSO aims to provide thought leadership on issues that bear on ERM, internal control, and fraud deterrence

Reminder: March 31 Deadline on COSO Exposure Draft
In other COSO news, as a reminder, there is a March 31 comment deadline on COSO's Exposure Draft (ED) released in December 2011. The ED is COSO's mechanism to obtain public comment on the proposed update of COSO's 1992 Internal Control-Integrated Framework.

The ED and related materials can be downloaded from COSO's website, www.coso.org.

Further information can be found in our earlier blog post, and in this article (referencing related podcast)  Internal Control, Revisited  by Ken Tysiac in the March 2012 AICPA JofA. 

AICPA JofA's Tysiac notes in his article: 
To learn more about the ED, the JofA held a telephone conference with COSO Chairman David Landsittel and three others in prominent roles with COSO. Participants were Larry Rittenberg, an accounting professor at the University of Wisconsin–Madison; Bill Schneider, AT&T director of accounting; and Chuck Landes, AICPA vice president–Professional Standards & Services.

 
Posted: 3/1/2012 5:10:56 PM by Edith Orenstein | with 0 comments
Filed under: board oversight,Exposure Draft,internal control,professional judgment,COSO,Glover,JofA,KPMG,Prawitt,AICPA


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Edith Orenstein