Observed effectiveness of the COSO 2013 framework
Journal of Accounting & Organizational Change
ISSN: 1832-5912
Article publication date: 21 January 2020
Issue publication date: 20 April 2020
Abstract
Purpose
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/approach
The paper uses regression analyses based on a sample of US firms subject to Sarbanes-Oxley Act Section 404(b).
Findings
Timely-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 implications
The 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/value
Unlike 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.
Keywords
Citation
Udeh, I. (2020), "Observed effectiveness of the COSO 2013 framework", Journal of Accounting & Organizational Change, Vol. 16 No. 1, pp. 31-45. https://doi.org/10.1108/JAOC-07-2018-0064
Publisher
:Emerald Publishing Limited
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