COSO vs. COBIT: Framework Basics, Differences, and Examples

COSO vs. COBIT: Framework Basics, Differences, and Examples

COSO vs. COBIT — these two popular auditing control frameworks were designed to prevent fraud and apply an enterprise risk management ERM approach to your internal controls over financial reporting, governance, and IT — but do you have to choose just one? There is some overlap between COSO and COBIT, and a few key differences that make these two frameworks highly complementary for organizations that must maintain SOX compliance and that have a complex IT environment. Learn more about the similarities and differences between COSO vs. COBIT, their applications in fraud prevention and internal auditing, and how best to integrate these systems to meet your organization’s needs. 

What Does COSO Stand for? 

COSO stands for the Committee of Sponsoring Organizations of the Treadway Commission, but the acronym is also used as shorthand for the COSO Framework for Internal Controls. COSO was founded in 1985 by five private-sector organizations to fight fraud and establish standards for internal controls: the American Institute of Certified Public Accountants (AICPA), the American Accounting Organization (AAO), the Institute of Internal Auditors (IIA), the Institute of Management Accountants (IMA), and the Financial Executives International (FEI). COSO oversaw the National Commission on Fraudulent Financial Reporting, less formally known as the Treadway Commission, after its first president, James Treadway. The COSO Framework for Internal Controls grew from the Treadway Commission’s first report back in 1987

What Is the COSO Framework Used for? 

The COSO framework for Internal Controls is used to organize internal controls that prevent the fraudulent reporting of financial activities. It provides guiding principles for internal controls across the entire enterprise. COSO has also published a popular framework for enterprise risk management (ERM)

Is COSO Required by SOX? 

COSO was designed to assist SOX compliance, but there is a difference between COSO and SOX. The Sarbanes-Oxley Act was passed in 2002 by US Senator Paul Sarbanes and US Representative Michael Oxley in response to the fraudulent activities that led to the demise of corporations like Enron and Tyco. Per Sec.404, SOX requires that enterprises maintain and report on internal controls for fraud prevention and makes an organization’s CEO and CFO criminally accountable for fraudulent activity. However, SOX doesn’t provide a framework for those internal controls. COSO does, and it was developed specifically to operationalize SOX legislation, giving managers a clear path towards SOX compliance. 

What Does COBIT Stand for? 

COBIT is the acronym for Control Objectives for Information and Related Technologies; this IT framework was founded by ISACA, the Information Systems and Audit Control Association in 1996 and has been instrumental in helping organizations develop internal controls to prevent fraud. Specifically, COBIT has become the standard for developing IT management and governance strategies to prevent fraud. 

What Is the COBIT Framework? 

The original COBIT 5 framework was an instruction manual for creating a secure IT system for financial risk reporting that is well integrated into your business management and governance. The “5” in the COBIT 5 framework stands for COBIT’s five organizing principles. The original COBIT 5 included the following five principles: 1) Meeting Stakeholder Needs, 2) Covering the Enterprise End-to-End, 3) Applying a Single Integrated Framework, 4) Enabling a Holistic Approach, and 5) Separating Governance and Management. 

ISACA has since updated COBIT 5 to become COBIT 2019; the update offers six slightly reorganized and reclassified principles. 

These six principles are: 1) Provide Stakeholder Value, 2) Holistic Approach, 3) Dynamic Governance System, 4) Governance Distinct from Management, 5) Tailored to Enterprise Needs, and 6) End-to-End Governance System.


Essentially, the COBIT 2019 six principles reorganize and clarify the original five, specify that the governance system is the “integrated framework”, and provide a separate principle pinpointing enterprise needs. 

What Is the COBIT Framework Used for? 

The COBIT Framework provides detailed instructions for how to design and implement a secure IT infrastructure related to business management and governance.  

Why Are the COSO and COBIT Frameworks Important?

COSO and COBIT frameworks are both useful for creating, managing, and maintaining internal controls for fraud prevention. COSO provides the overarching framework for fraud prevention through risk management and COBIT helps you to ensure that your IT system enhances and strengthens these controls. Ultimately, using these frameworks to develop strong internal controls will fortify your organization and protect it from SOX noncompliance and SEC charges for fraudulent reporting of financial activities. 

What Are the Similarities Between COSO and COBIT?

Despite their differences, there’s a strong overlap between COSO and COBIT and both are essential to financial risk reporting. COSO and COBIT are two compatible and synergistic internal control frameworks that can be used together to cover both fraud prevention in general and the qualities of an IT system designed to prevent fraud.

What Are the Differences Between COSO and COBIT? 

There are a few key differences in purpose, scope, and level of detail that make COSO and COBIT extremely complementary as opposed to redundant. Read on to compare COSO vs. COBIT: 

1. Purpose

Both COSO and COBIT were designed to be frameworks for internal controls, but COSO focuses on fiduciary duty and financial risk reporting more broadly and COBIT is focused on the structure and security of the IT system. 

2. Scope 

COSO provides the conceptual structure for financial risk reporting and COBIT spends time developing one component of that structure; this makes sense because COSO is meant to cover all aspects of an enterprise’s financial reporting and COBIT zooms in to cover the specific design of information systems, IT governance, and cybersecurity standards.

3. Level of Detail

Because COBIT was designed as an applied risk management approach to preventing fraudulent financial reporting and COSO was designed to offer broader guidance and define the ERM context for fraud prevention, COBIT offers more detail on how to actually implement controls. The narrower scope of COBIT means that it provides greater detail on IT security than COSO and outlines how to build an IT landscape that prevents fraud. 

The InfoSec Survival Guide: Achieving Continuous Compliance

Do Organizations Need Both COBIT and COSO?

An organization that needs to be SOX compliant and has a complex IT environment would benefit from using COBIT and COSO in tandem; they can be integrated seamlessly to provide full fraud prevention coverage for your organization.

How an Automated System Can Help With Mapping COSO and COBIT

You can use a spreadsheet, like the one the AICPA offers, to track your COSO vs. COBIT compliance and visualize how the two frameworks dovetail — but the spreadsheet doesn’t update itself and is monotonous and time consuming. Especially as you approach the monitoring phase of COSO and work to meet stakeholder needs through COBIT, the right compliance management software can facilitate the process of mapping COSO and COBIT, save you time, and help you develop strong internal controls for fraud prevention.