From the PresidentThe Committee of Sponsoring Organizations (COSO) of the National Commission on Fraudulent Financial Reporting, or the Treadway Commission, has released 'Internal Control - Integrated Framework.' The report describes internal control and its elements, and furnishes a standard for evaluating internal controls. Several organizations, including the Federal Deposit Insurance Corp, have expressed their satisfaction and agreement with the report. However, there are individuals who maintain their objection to the document. According to Asst Comptroller General Donald Chapin, the paper fails to meet the requirements of the Treadway Commission and asserts the need for legislation. Nevertheless, the commission reiterated that the integrity of financial reporting rests not on the auditors but on top management. Thus, legislating auditors' report on internal control is pointless because fraud is usually committed by top-level managers.
Can honesty be legislated?
In 1820, English clergyman and author C.C. Colton wrote, "There are some frauds so well conducted, that it would be stupidity not to be deceived by them." Nearly 175 years later, we are frequently su...