Proposed Update to ERM Framework and BEC Exam


Today, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued an exposure draft, seeking comment for the proposal, Enterprise Risk Management—Aligning Risk with Strategy, submitted to update and clarify the 2004 Enterprise Risk Management (ERM) Framework.

The ERM Framework is utilized by, “management and boards to enhance an organization’s ability to manage uncertainty, consider how much risk to accept, and improve understanding of opportunities as it strives to increase and preserve stakeholder value.”

The Journal of Accountancy describes the update as a response to, “growing complexity and speed of risk over the past decade.”

The updated framework:

  • Provides greater insight into the role of enterprise risk management when setting and executing strategy.
  • Enhances alignment between performance and enterprise risk management.
  • Accommodates expectations for governance and oversight.
  • Recognizes the globalization of markets and operations and the need to apply a common, albeit tailored, approach across geographies.
  • Presents new ways to view risk to setting and achieving objectives in the context of greater business complexity.
  • Expands reporting to address expectations for greater stakeholder transparency.
  • Accommodates evolving technologies and the growth of data analytics in supporting decision-making.

ERM on the Business Environment & Concepts (BEC) Exam

The current BEC exam includes the ERM framework as part of the 16-20% Corporate Governance element of the Content Specification Outline. It appears as if it will be even more important for the 2017 exam. Beginning in April 2017, enterprise risk management is one of three content groups in the 17-27% BEC Corporate Governance Area of the 2017 CPA Exam Blueprints.

Public comments will be accepted until September 30th, 2016 at

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