COSO Enterprise Risk Management- Integrated Framework The Committee of Sponsoring Organizations of the Treadway Commission (COSO) created its internal control integrated framework to help enhance organization's enterprise risk management systems while still ensuring compliance with existing systems of ethics. At the time when it was constructed, a series of business scandals had raised "heightened concern and focus on risk management, and it became increasingly clear that a need exists for a robust framework to effectively identify, assess, and manage risk" (Flaherty & Mackey v). COSO was first instituted in the wake of the savings and loan debacle of the 1980s and there were calls for greater and more transparent record-keeping on the part of organizations to protect both investors and shareholders (Shaw 1). Of course, since its implementation, the wave of accounting-related scandals has failed to abate. COSO has been updated and reformed in the 21st century after the passage of the Sarbanes-Oxley Act (SOX) but whether it has the necessary specificity to offer meaningful guidelines to organizations to reduce risk, enhance growth, and ensure compliance with existing standards remains debatable.

COSO defines enterprise risk management as responding to several core, basic needs. The first is "aligning risk appetite and strategy," given that risk will vary from entity to entity (Flaherty & Mackey 1). It also means being more responsive to risk, ensuring that decisions are made to ensure that the best response is selected. As well as reducing losses risk management according to COSO also entails proactively identifying surprises and being better able to identify risks across enterprises. It also means seizing opportunities to capitalize upon and to more effectively deploy organizational capital (Flaherty & Mackey 1). Ideally, implementing COSO creates a more proactive and responsive organization that is agile enough to respond to changes in the environment. Its lack of specificity...

"The framework emphasizes the importance of identifying and managing risks across the enterprise from a portfolio perspective. Many organizations perform risk management within each subdivision, but part of the overall vision of ERM is that the risks that occur in the subunits and sublevels of the entity are aggregated and viewed from the top as an overall portfolio of risk"(Chapman 3). It is a process-based theory and does not view internal controls as an end in and of themselves. Education of all employees prioritized as a method of control as all organizational players must work to improve operations, reporting, and compliance. There is a strong stress upon creating a culture that takes an appropriate view of risk and views ethics in a positive fashion, rather than as a threat to productivity. "Many frauds occur in companies that have excellent internal control systems because the corporate culture allows managers and employees to 'look the other way' and simply ignore that controls are being overridden" (Baggett 10). COSO's open-ended framework is guided by the concept that "attitudes are as important as systems" and that management must construct a belief system founded upon ethics (Baggett 10).
However, there have been a number of vocal critics of this somewhat diffuse concept behind the COSO framework. COSO has been criticized as excessively vague: it is fundamentally a principles-based system, without definitive, concrete standards. While in some quarters there has been increasing appreciation of a principles-based approach to accounting, others view this as giving too much discretion to management to misrepresent results. "Relying exclusively on rules permits accountants…