From a high level, we can easily make two observations regarding the complex issue of internal control over financial reporting (ICFR). First, effective ICFR is a keystone of investor confidence. Investors depend on reliable financial information and ICFR helps reduce the risk that financial statements will contain material errors or misstatements.
Second, ICFR is challenging. The design, implementation and oversight of effective controls demand attention and effort from senior management, boards, auditors, regulators and others. What’s more, given the dynamic and evolving nature of our financial markets, these challenges are both shifting and persistent.
The good news? In the face of these challenges, stakeholders from across the financial reporting supply chain have elevated the debate and dialogue around ICFR to new heights. Through this interaction, they are taking control of internal control—identifying ways to enhance our approach to this critical safeguard for investors.
About the Author
Cindy Fornelli is the Executive Director for the Center for Audit Quality (CAQ). She’s also the former Deputy Director of Investment Management at the SEC and Senior Vice-President at Bank of America.