Committee of Sponsoring Organizations
of the Treadway Commission (COSO), is a U.S. private-sector
initiative, formed in 1985. Its major objective is to identify the
factors that cause fraudulent financial reporting and to make
recommendations to reduce its incidence. COSO has established a common
definition of internal controls, standards, and criteria against which
companies and organizations can assess their control systems.
COSO is sponsored and funded by 5 main
professional accounting associations and institutes; American
Institute of Certified Public Accountants (AICPA), American Accounting
Association (AAA), Financial Executives International (FEI), The
Institute of Internal Auditors (IIA) and The Institute of Management
Accountants (IMA).
Due to questionable corporate political
campaign finance practices and foreign corrupt practices in the mid
-1970s, the SEC and the U.S. Congress enacted campaign finance law
reforms and the 1977 Foreign Corrupt Practices Act (FCPA) which criminalized
transnational bribery and required companies to implement internal
control programs. In response, a private-sector initiative, called the
National Commission on Fraudulent Financial Reporting (commonly known
as the Treadway Commission) was formed in October 1985. The Treadway
Commission issued its initial report in 1987 among other items it
recommended the following for the improvement of education
- Throughout the business and
accounting curriculum, academicians should promote the knowledge
and understanding of the factors that leads to fraudulent
financial reporting and the strategies that can help to a reduce
the incidences of corporate frauds.
- Business and accounting students
should be well-informed about the regulation and enforcement
activities by which government and private bodies safeguard
their financial reporting system and thereby protect the
interest of the investors.
- The business and accounting
curriculum should help students to develop stronger analytical,
problem solving, and judgment skills to help prevent, detect,
and deter fraudulent financial reporting when they become
participants in the financial reporting process.
- The business and accounting
curriculum should foster ethical values by integrating their
development with the acquisition of knowledge and skills to help
prevent, detect, and deter fraudulent financial reporting.
- Business schools should encourage
business and accounting faculty to develop their own personal
competence as well as classroom materials for conveying
information, skills, and ethical values that can help prevent,
detect, and deter fraudulent financial reporting. Business
school faculty reward systems should recognize and reward the
contribution of faculty who develop such competence and
materials.
At
some point Indian education system will also have to adopt the
suggestions of the Treadway commission report and as a result we have
come up with the University Collaboration Program with common syllabi
for the universities and B-schools to be incorporated in their
curriculum.
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