Assignment: COSO Framework Application in PricewaterhouseCoopers (PwC)

COSO Framework Application in PricewaterhouseCoopers (PwC)
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COSO Framework Application in PricewaterhouseCoopers (PwC)
Introduction
This paper contextualizes the application of Sponsoring Organizations (COSO) framework in PricewaterhouseCoopers. PricewaterhouseCoopers (PwC) is an international corporate organization dealing with professional services. PricewaterhouseCoopers LLP (PwC) provides professional services offer business advisory services involving auditing, accounting, taxation, human resource consulting, and strategic management services. Its operations area spans multiple fields such as defense, automotive industries, insurance, healthcare, transport, energy, and government, amongst many more! The Committee of Sponsoring Organizations (COSO) of the Treadway Commission developed a revamped enterprise risk management (ERM) framework, popularly called Enterprise Risk Management in 2017( Anders,2019). Since 1992, COSO has aided organizations design, operate, and evaluate the effectiveness of their systems of internal control over financial reporting and attain assurance that their risk of material misstatement has been minimized to an acceptable level ( Pett, Blomster & Wallace, 2015). This framework integrates strategy and performance to aid organizations in understanding and prioritize the risks. The most recent COSO framework is composed of five fundamental components.
COSO-FIVE Interrelated items in the framework
There are five core components of the COSO framework (Rae, Sands & Subramaniam, 2017). First, a governance aspect entails an institutional tone that highlights enterprise risks' relevance and develops responsibilities and oversight targeting enterprise risk management (Moeller, 2011). It involves organizational culture encompassing ethical values, expected behaviors, and in-depth comprehension of risk. Second is the strategy and objective-setting, where objective-setting works together in the strategic-planning process. A risk appetite is established and aligned with strategy. The business objectives put the plan into practice while serving as a basis for identifying, assessing, and responding to risk. The third point is bout performance. Risks that may impact the achievement of strategy and business objectives need to be identified and assessed and prioritized by severity in the context of risk appetite. Fourth, there is a component of reviews and revision: Reviewing organization performance involves determining how well the enterprise risk management functions with respect to various changes and rectifications that are needed. Finally, the COSO framework's final aspect revolves around information, communication, and reporting. There is a need for a continual and timely flow of information from both internal and external sources across the whole organization. COSO is anchored on various tenets of enterprise risk management. These items include integration, creating and emphasizing value, establishing links to strategy, recognizing the importance of culture, establishing links to performance, and decision making.
COSO Framework application in PricewaterhouseCoopers LLP Enterprise Risk Management
Every corporate organization such as PwC faces a plethora of risks arising from both external and internal environments. One class of risk that faces PwC revolves around market risk, which has a wide range of risks, including technological disruptions, societal pressures and thrust, behaviors and values, and network mutuality. The technology-enabled disruption involves failure to respond to, and prepare for, disruption. Failing to acquire contemporary technological services or solutions will cause a loss of agility and speed in the business environment. A risk in strategic execution entails a failure to ensure relevance and not meeting client expectations. Investment risk is inadequate investment in future growth areas and reinvestment in existing services. Societal and trust involves failure to anticipate and respond to the market and societal expectations or failure to participate in the societal agenda appropriately. Purpose, values, and behaviors are concepts that can damage PwC’s reputation. Failure to adopt and live our values is a critical risk factor. Issues such as corruption and other unethical practices can damage company’s image, leading to loss of trust and clients or business.
The contemporary business world in which corporate organizations such as PricewaterhouseCoopers LLP are sophisticated, intricate, unpredictable, and completive. Businesses are forced to navigate through an environment marred by many risks. There are many risks and uncertainties in the current business environment impacting business operation at PricewaterhouseCoopers LLP. Socio-economic and political changes often present a risk to corporate organizations. Issues such as corruption, misappropriation of funds, dishonesty, and pilferage constitute a body of risk that puts organizational reputation at risk.
In response to immense enterprise risk, the organization has to establish and strengthen its areas of operations to respond to and prevent such risk. The measures include actively identifying, measuring, prioritizing, responding, and monitoring the risks that threaten organizational operations and performance.
The components of COSO are highly intertwined and interrelated. These components do not operate in isolation. Instead, an issue such as governance permeates through various wings in PricewaterhouseCoopers LLP, including management, performance, risk management, compliance, and audit. PwC incorporates governance, risk management, compliance, and internal audit training programs to approach enterprise risk management.
The overall COSO framework in PwC deploys intertwining components, including key elements in corporate governance framework, core risk management processes, and approaches to manage risks, and critical elements in internal control framework and approaches to mitigate risk in internal controls fundamentals. It also entails enterprise risk management that involves designing and implementing an enterprise risk management program. The compliance function entails setting up a compliance function and program to control processes and organizational practices. The internal audit at PwC defines internal audit processes and approaches to conducting an audit exercise as an approach to identifying risks and as means of developing a blueprint for countering such risk and taking other necessary action. The enterprise risk management at PwC involves the Board of Directors and Audit Committee as espoused in governance. PwC pursues efficient corporate governance, audits, risk management, compliance, and auditing due to their associated benefits such as improving performance and profitability, better shareholder accountability and corporate reputation, and enhanced dialogue with shareholders, rating agencies, and regulators.
PricewaterhouseCoopers LLP has developed a robust system to leverage its enterprise risk management efforts. It has ensured proper enterprise risk management v...