Determinants of Timely Adoption of the 2013 COSO Integrated Framework

Abstract

ABSTRACT In 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released an updated version of its widely utilized Internal Control—Integrated Framework. The update responded to two decades of changes in the business environment and increased focus on technology in business operations and reporting. While the old framework is no longer supported by COSO (effective December 15, 2014), some SEC filers continued to utilize the old framework past its phase-out date. This placed such companies at increased risk for internal control failure compared to other companies and SEC scrutiny. We examine determinants of timely adoption of the 2013 COSO framework update. We find evidence that timely adoption is related to absence of reported internal control weaknesses, auditing firms, and interlocking directorates. Our study contributes to literature on how social networks and operational characteristics affect internal control governance decisions.