Discussant's response to "Internal control: Progress and perils";

              Discussant's Response to "Internal Control: Progress and Perils"
Andrew D. Bailey, Jr*
University of Arizona Introduction
This comment is organized around the Winters and Guy paper and the COSO (Committee of Sponsoring Organizations) Internal Control-Integrated Framework project [COSO, 1992; Winters and Guy, 1992], I was a member of the Project Advisory Council to COSO, Guidance and Oversight. This group included representatives from each of the COSO participating organizations, FEI (Financial Executive Institute), IIA (Institute of Internal Auditors), IMA (Institute of Management Accountants), AICPA (American Institute of Certified Public Accountants), and AAA (American Accounting Association). As the AAA representative, I participated in all COSO Advisory Council deliberations. As is the habit of the AAA, I was not authorized to speak for the Association. The AAA Executive Committee recently endorsed the private sector initiative represented by the internal control framework project, but did not endorse the specific contents of the report. Discussions with the AAA were still in progress when this paper was submitted. Any comments made by me concerning the results of the framework study are mine and not those of the AAA or other COSO Advisory Council members.
Background
Some background, as I interpret it, on the evolution of the COSO Internal Control project may be of use. In developing the COSO response to the Treadway recommendations concerning an integrated definition of internal con-trol, it was decided to develop the project within the existing FERF (Financial Executive Research Foundation) research framework. The usual research process involves a task force, such as the COSO Project Advisory Council, but drawn from FEI members. Ordinarily a FERF project team is in direct charge of their project and accepts direction from the task force as it deems reasonable. It is the project team's option to reject advice and FERF's option to publish or not publish the resulting report. Given the nature of this project and the perception by many that the internal control project was essential to providing a basis for potential legislation and/or regulation in the area, the COSO Advisory Council wanted to take a much more direct hand in setting direction for the resulting report. The initial relations between the Coopers & Lybrand project team and
The author wants to thank the members of the COSO Advisory Council for their valuable input on an earlier version of this paper. Interpretations remain my own.
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