COSO Releases Internal Control Guidance for Sustainability Reporting
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently released a study providing supplemental guidance for applying its Internal Control-Integrated Framework (ICIF) to sustainability reporting.
COSO's framework, used by many publicly traded U.S. companies in their reporting on the effectiveness of internal control over financial reporting (ICFR), was last revised in 2013. COSO believes the new supplemental guidance will build trust and confidence in ESG/sustainability reporting, public disclosures and enterprise decision-making.
Leveraging the significant knowledge gained in the application of ICIF to financial reporting over the past two decades, “Achieving Effective Internal Control over Sustainability Reporting (ICSR): Building Trust and Confidence through the COSO Internal Control―Integrated Framework” introduces “internal control over sustainability reporting” (ICSR) into the internal control lexicon. The new study references and expands on a 2017 study, “Leveraging the COSO Internal Control—Integrated Framework to Improve Confidence in Sustainability Performance Data.”
The supplemental guidance points to several key themes as organizations and practitioners begin or continue their journeys toward establishing and maintaining an effective system of internal control over financial and sustainable business information. COSO stated that although ICSR is not yet well established in practice, the paper discusses crucial insights that can be gained from the experiences of those organizations that are leading the way. In the new study, each of the 17 principles in ICIF-2013 is explained and interpreted for application to sustainability. Additionally, “points of focus” from the ICIF are included along with practical insights and application of the supplemental guidance.