The Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently released for comment a draft 2012 Internal Control—Integrated Framework. The 2012 framework, expected to be released later this year, addresses changes in the globalization of markets, operations, and business models; rapidly changing technology; increasingly complex regulatory requirements; and growing expectations for governance oversight that have evolved since the original was implemented in 1992.

The revised framework retains the original five components of internal control (control environment, risk assessment, control activities, information and communication, and monitoring) but incorporates additional principles and attributes intended to provide clarity in the design and development of internal controls, and that can support the assessment of the effectiveness of internal controls.

The new draft provides what I believe is improved guidance and clarity for completing a comprehensive risk assessment in a number of areas:

  • Most significant is the clarification that the risk assessment process includes risk identification, risk analysis (for example, the probability of occurrence and potential impact), and risk response (such as how the risk should be managed, with acceptance, avoidance, reduction and sharing).
  • Identifying risks is clearly linked to the achievement of an entity’s objectives.
  • Risk is considered within the overall entity and within its subunits (HR, legal, purchasing, etc.).
  • Risk tolerances are incorporated into the assessment of acceptable risk levels.
  • The new framework emphasizes the need for management to understand significant changes in internal and external factors that may impact the overall system of internal controls (external factors may include economic changes that impact financing or availability of capital; internal factors may include significant changes in management responsibilities or disruptions in information systems processing that can adversely impact operations).
  • The new framework considers not only fraud risks related to financial reporting or safeguarding of assets, but also risks related to corruption and specific attributes in identifying and evaluating such risks.

Don’t wait—update now
Even though the 2012 Internal Control—Integrated Framework is still in draft form, I believe there is much that management can leverage in updating their risk assessment processes in the new year. The new framework provides a much more robust process that covers risk assessment against stated business objectives; risks associated with fraud and corruption and safeguarding assets; and risk appetite as an integral part of control activities. It adds value by ensuring that you’re focusing on the right internal controls so your company meets objectives and sustains and improves performance.

This means now is the time to take a fresh perspective and evaluate current processes, rather than waiting until the new framework is released. Making sure your activities are in alignment with the new framework now will put you ahead of the game.

To read the draft 2012 Framework and provide comments, go to the COSO website.

The new year is traditionally a time of looking forward and reflecting on changes you want to make in your life, taking stock of your current situation and setting new goals. The same concepts apply to your professional life. How can you be happier in your work and make 2012 a great year? Here are some goals I’ve set for myself—I hope these ideas will get the ball rolling for you.

Create a solution
In the current economy, almost everyone is being asked to do more with less, but hard work with long hours over an extended period can lead to mistakes and burnout. Instead, take the initiative to find solutions—is there something you can do to improve workflow or build in efficiencies? Take a look at the old ways of doing things with fresh eyes and see what you come up with!

Stretch and grow
The world evolves quickly; a true professional stays ahead of the curve. What new skills are you targeting for FY2012? These can be in a technical accounting area (the ever-changing rules of the SEC and FASB provide plenty of opportunities for keeping your skills fresh), and can also be in nontechnical areas such as time management, people management or even learning to blog! Learning new things can also renew enthusiasm about your work.

Communicate honestly
Frustrated by interactions with a co-worker? One of your teammates not pulling their weight? Forecast information not making sense? We all face situations where it is difficult to have a frank, open conversation; it takes courage to bring up a thorny issue, sit down and have an honest conversation about it. While not pleasant in the moment, I find that having a difficult conversation usually leads to better understanding and smoother working relationships in the future.

Build good relationships
Is there something you can do to better support your colleagues? Are you proactive? Do you meet your commitments? Or maybe this is the year to make some inroads in expanding your networking activities—it can be a great energy boost, and who knows who you might get to know!

What are you going to do to make 2012 the best year yet? I’d love to hear your own resolutions—just post a comment below.