COSO teams with NACD on corporate governance framework

The Committee of Sponsoring Organizations of the Treadway Commission is working with the National Association of Corporate Directors to develop a corporate governance framework that they hope will be as widely adopted as COSO’s internal controls and enterprise risk management frameworks.

The project is still in its early stages, but COSO and the NACD issued a request for proposals Wednesday to develop the framework. They envision a set of principles that would guide organizations in effective, efficient decision-making and governance practices. It would be geared mainly toward public companies in the U.S., but could also be used by private and public sector organizations of various sizes in the U.S. and abroad. The main body of the document would be designed for use by boards as well as management, auditors and stakeholders. 

COSO is jointly sponsored by the American Accounting Association, the American Institute of CPAs, Financial Executives International, the Institute of Management Accountants and the Institute of Internal Auditors. The NACD is a membership organization for board directors and has long focused on corporate governance. 

The corporate governance framework would align with the existing COSO internal control and enterprise risk management frameworks. It could be used by public companies that want to assess and enhance their own governance practices, and by startup businesses that wish to build up their governance practices and processes. Private organizations could also use the framework for best practices or as part of readiness activities related to IPO efforts. External auditors, internal auditors, rating agencies, investors, listing agencies and regulators could also find the framework useful in assessing governance practices at related entities.

“There is a significant need for principles-based guidance in developing and implementing effective governance practices, starting at the boardroom level and continuing throughout an organization,” said Lucia Wind, executive director and chair of COSO, in a statement. “Effective organizational governance is critical in creating the policies and promoting the behaviors that underpin an organization’s business operations and ensure alignment with the interests of stakeholders.”

“Effective governance helps create trust in the capital markets, advances ethical business practices and drives long-term, sustainable performance,” said NACD president and CEO Peter Gleason in a statement. 

Proposals are due April 1, 2024, and COSO and the NACD hope to complete the project by June 30, 2025. However, organizations that intend to respond to the RFP have to first provide a notice of intent to respond by Feb. 20, 2024. All participants can view the RFP and submit information by clicking here. Alternatively, to request a copy of the RFP as well as corresponding documents, email Lucia Wind at Lucia.wind@coso.org and/or Patricia Miller, acting advisory council chair, at pkmiller100@gmail.com.