The COSO framework and Trust Services Criteria explained for the CPA Exam ISC section: this lecture shows how the COSO internal control framework integrates with the AICPA Trust Services Criteria (TSC) in a SOC engagement, and walks through the five components of COSO and how the TSC map onto them. Perfect for CPA and CMA exam candidates, IT auditors, and accounting practitioners studying Information Systems and Controls (ISC), internal control over IT, and SOC 2 reporting.

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Video Timeline & Key Concepts:
0:00 Introduction: COSO, Trust Services Criteria, and SOC 2 engagements
6:55 The five interrelated components of COSO (17 principles)
9:24 Control Environment: integrity, ethical values, and governance
12:29 Risk Assessment: identifying and analyzing risks to objectives
15:45 Control Activities: policies and procedures to mitigate risks
19:17 Information and Communication across the organization
20:47 Monitoring Activities: ongoing evaluation of controls

Frequently Asked Questions:

What is the COSO framework?

The COSO framework is an internal control framework developed by the Committee of Sponsoring Organizations of the Treadway Commission. It consists of five interrelated components and seventeen underlying principles that organizations follow to design, implement, and maintain an effective system of internal control.

What are the five components of the COSO framework?

The five components are the control environment, which sets the tone and governance; risk assessment, which identifies and analyzes risks to objectives; control activities, which are the policies and procedures that mitigate risks; information and communication, which captures and shares relevant information; and monitoring activities, which evaluate whether controls operate effectively over time.

How does COSO relate to the Trust Services Criteria?

In a SOC 2 engagement, the Trust Services Criteria are mapped onto the COSO framework. COSO provides the high-level components and principles, while the Trust Services Criteria add specific criteria for managing information and technology, including supplemental criteria that address IT operations.

What are the Trust Services Criteria?

The Trust Services Criteria are security, availability, processing integrity, confidentiality, and privacy. Security is a common criteria present in every SOC 2 engagement, while the other categories are included based on the commitments the service organization makes to its users.

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