UNIVERSIDAD AUTONOMA DE NUEVO LEON FACULTAD DE CONTADURIA PUBLICA Y ADMNISTRACION LICENCIADO EN NEGOCIOS INTERNACIONALES ACCOUNTIG III FINAL PROJECT Teacher: Marco Arguiropulos Team: Anakaren Ramirez Aguirre. Melissa Tamez Ortiz. Navil Deyanira Vazquez Raigoza. INTRODUCTION

This work aims to understand the importance of the internal control in organizations to achieve the objectives established but first we have to know the definition of internal control that is the process, incurred by the board of directors or the administration and other personal that is designed to provide management with reasonable assurance on the achievement of the effectiveness of operations, the reliability of financial information and compliance with laws and regulations.

One of the first countries in having an internal control was the United States with its model of internal control called COSO focusing in research and guidance on the control environment dealing with behavioral issues and providing guidance on internal control in the public sector. This model identifies five components that are: control environment, risk assessment, control activities, information and communication and monitoring.

Later Canada developed its own model called COCO that provides that an organization should be understood as a group of people who work for the achievement of certain goals while the American model (COSO) gives all the responsibilities to the directors of the organizations. Apart of these two models of internal control the United Kingdom developed one called CADBURY that takes some parts of the COSO model.

There are some different differences between the COSO and COCO model but one of the most important is that COSO gives all the responsibilities about the internal control to the director of the organizations and COCO says that every employee of the organization is responsible of the internal control. Systems of internal control Globalization and technological advances have led to develop new models and are emerging as a proposal that seeks to implement new ways to improve and refine the control in organizations.

One of the first countries to develop a model of internal control was United States by the National Commission on reports financial fraud on September 1992. COSO In September 1992 the Committee of sponsoring organizations of the Tradeway Commission in the United States, published the document entitled Internal Control–integrated framework, better known as the model of COSO control. COSO is composed of five interrelated components that are the basis proposed by the Organization, which are: * Control environment Monitoring * Control activities * Processing and communication * Risk assessment Control environment: It is the basic component of the organization and brings discipline and structure that reflects the attitude in the entity. Integrity and ethical values are essential elements of this/ that are the product of ethical standards and behavior of the administration. The control environment is influenced by the degree to which employees understand that they will be responsible for their actions.

The area of human resources should send messages to employees with respect to the expected level of performance and conduct. Risks assessment: Identification and analysis of those that relate to the achievement of objectives, forming a basis for determining how to handle them. Taking risk is needed to grow but the administration should identify them and analyze them. Today should be attention to: 1. Technological advances 2. Operating environments in change 3. New lines of business 4. Corporate restricting 5.

The expansion or acquisition of foreign operations 6. The newly hired personnel 7. Rapid growth The risks are the actions, internal or external events to the enterprise circumstances affecting their ability to achieve its objectives that can affect the company; however there is a way to ensure us to eliminate them completely. All organizations have risks and depend of the business. The Administration determinates the level of risk that your company can accept and identify actions to keep at that level. Information and communication:

Process of capture and exchange information necessary to lead, manage and control the operation of an entity. The quality of information as the communication of an entity affects the decision-making in the control of their activities. Main aspects: 1. Information system 2. The delegation of responsibilities for control 3. Organizational communication 4. External communication Control activities: Must be integrated in the process of risk assessment and occur throughout the organization at all levels and all the functions.

Such as preventive and detectives vary according to the type of company, depend on the nature of the enterprise and competition, preferences and imagination of the people who design them. The effectiveness of the controls in an entity, decrease the degree of risk of mistakes affecting your financial information. Systems of internal control as well as any company evolve over time. Control activities are classified as follows: 1. Preventive controls 2. Detection controls 3. Corrective controls 4. Manual controls or user . Controls in computer of information technology 6. Administrative controls Any of these should be appropriate to minimize the risks Monitoring: It is the process in which the Administration evaluates the quality of implementation of internal control in time and involves the design and operation of controls in a timely manner and takes necessary remedial actions. Make sure that the process is working as it is intended. This evaluation is done through continuous activities, split actions or even a combination of both.

COSO’s goal is to provide thought leadership dealing with three interrelated subjects: * Enterprise risk management (ERM). * Internal control. * Fraud deterrence. Controls implements in the business processes: * Effective controls in the business processes must be implemented without inhibiting the realization of the operative process. * Internal controls that make the slow implementation can be more harmful to have no controls due to the false sense of security provided. * There are controls that are too annoying because they need several steps of approval or occur too late in the process. COCO

Released by the Institute Canadian Accountants certified through a Council charged with designing and issuing criteria or general guidelines on control and published in 1995. Aims to develop guidance for the design, evaluation and responses on the systems of control within organizations including related issues of corporate governance in the public and private sectors. COCO is the product of the Committee on the COSO report criteria and whose purpose was to make the approach to a model simple and understandable given the difficulties in the implementation of the COSO initially faced some organizations.

COCO describes internal control as actions that pursue the best result for an organization. The purpose of COCO guidelines for the design, evaluations and reports on the systems of control within organizations. COCO guide the structure of the control is built with: * Definition of control * Criteria for control * The way in which the criteria are grouped COCO provides that an organization should be understood as a group of people who work in the achievement of certain goals by the basement, the objectives are to be the determining factors of what should be included or excluded from an organization.

The structure of the Canadian model provides a holistic view of very useful on the control. The content of the guide requires creativity to their interpretation and application, as it offers great flexibility as regards as the control is implemented without prescribe or impose a detailed set of policies and procedures. The effectiveness of control in any organization can be evaluated using these criteria regardless of the type of organization or the objectives pursued. COMPARISON COSO: * It was developed in September 1992. Achieve an improvement in internal control and corporate governance in organizations. * Has a process as a pyramid of interrelated elements. * Takes into account individually for each Member as an important part. * Only the directors have the responsibility of internal control. COCO: * It was developed in November 1995. * Make simple the COSO model, developing guidelines * Provides a frame through 20 general criteria * Sees more generally, should pay more attention the managers * Take in account every employee and delivers responsibilities of the internal control CADBURY

There is another model apart of these two (COSO and COCO) called CADBURY and it was developed by the United Kingdom in 1992 and adopts the same broad interpretation of the control of COSO model, the only difference is that limits the liability of control reports of financial information. Fraud: However despite these control measures internal in 2001 flare the biggest financial scandal registered in United States with the Enron Company which declared suspension of payments. Enron reported earnings of over U. S $ 1,000 million. However on December 2, it filed for bankruptcy claiming debts of more than U.

S $ 30,000 million. The bankruptcy left to thousands of its employees who lose their job well collapse saw the shares ($ 90 to U. S $ 0. 42) simulated by the acquired company’s board. Also the pension fund estimated around U. S $ 700 million. With its presence in over 40 countries and a number of associated companies, the collapse of Enron, had a negative impact on energy markets in general and in several companies that had provided loans or had contacts with Enron. Conclusion What we learn about this is that country is very different in the way they try to prevent things.

Also we see that the internal control in a company is very important because with this one you can make your company succeed or fail, also teaching not only your top executives but also the rest of the employees the correct way to do their job and the expectations you have for them, this can make want to succeed if they have clear goals. We believe that every company should implement this both like COSO or COCO or make a new one depending on the country we are talking about , to have a better control in it. Bibliography http://www. coso. org/ From the book: “Fundamentos de control interno”. Autor: Abraham Perdomo Moreno