COSO releases internal control guidance for sustainability reporting

By Bryan Strickland

The commission responsible for the most widely used internal control framework has published a paper providing guidance for applying the framework to sustainability reporting.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO), using its Internal Control — Integrated Framework as a baseline, released Achieving Effective Internal Control over Sustainability Reporting (ICSR): Building Trust and Confidence through the COSO Internal Control — Integrated Framework on Thursday.

COSO's framework originally was developed in 1992 and was revised in 2013. It has long been the flagship framework for publicly traded U.S. companies in their reporting on the effectiveness of internal control over financial reporting (ICFR). Now, companies have additional guidance for applying the framework to internal control over sustainability reporting (ICSR).

"The COSO board concluded there was a need to provide some additional guidance as to how you take that really good COSO 2013 internal control framework that has been used so extensively around the world for financial reporting — how do you apply that to sustainability reporting?" Bob Hirth, COSO chair at the time of the 2013 update, said during a webcast in November. "That's the crux of our project."

Hirth, a member of the AICPA's Sustainability Assurance and Advisory Task Force, is one of six authors of the new framework. The AICPA is among COSO's five supporting organizations.

"Companies will now have a clear road map for applying COSO's internal control principles to sustainability reporting, facilitating the disclosure of high-quality sustainability information," said AICPA Chief Auditor Jennifer Burns, CPA, a member of the COSO board. "Taking a familiar control framework and applying it to sustainability reporting will be beneficial not only to companies, but to their stakeholders as well."

According to an annual study by AICPA & CIMA, together as the Association of International Certified Professional Accountants, and the International Federation of Accountants, 95% of large global companies reported some sustainability data in 2021 — even though much of the information disclosed was voluntary.

Now, with the increase in demand and regulatory attention on sustainability reporting, COSO has taken the 17 principles that drive its ICFR framework and adapted them to apply to ICSR. In addition to laying out the framework, the COSO document offers eight key takeaways for stakeholders:

  • Cultivate a culture of accountability.
  • Revisit the interrelationship of purpose and various objectives.
  • Establish a cross-functional team.
  • Leverage existing expertise.
  • Leverage existing controls.
  • Leverage enabling technologies and platforms.
  • Focus on decision usefulness.
  • Start early.

"It will take time to develop a full system of controls," said Ami Beers, CPA, CGMA, senior director–Assurance & Advisory Innovation at AICPA & CIMA. "Developing ICSR might seem overwhelming due to the volume of data and topics to be covered. Focus on areas that are most important for the organization and build it over time."

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at

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