COSO III REPORT: APPLICATION IN ECUADORIAN CORPORATIONS

Internal Control is fundamental for the management of companies. The COSO III Report is a meaningful document for companies that aim to meet their objectives and reduce the risks in each of their departments. The objective of this study is to know the level of application of the COSO III Report in the corporations of the canton of Cuenca, Ecuador. The investigation was developed with the information obtained by means of a survey applied to the directors of the Corporations engaged in wholesale and retail trade in the canton of Cuenca, Ecuador. Based on this information, a descriptive analysis of the selected sample was made, detailing aspects such as the gender of the owner, educational instruction, and size of the company, presentation of audited financial statements and the existence of an internal audit department. Subsequently, the highest authority of each company rated the level of application of the five components of the COSO III Report by means of a Likert scale. Finally, the hypotheses were formulated and demonstrated through the application of the Chi-square test and the Pearson Correlation Coefficient. Among the results of the descriptive analysis, it was observed that 29% of the small companies are managed by executives with a third level of education. At the same time, it was determined that 51% of the managers who have third level education are male, while the female gender is present in only 17% of the managers. Among the results obtained by applying the Likert scale in the survey, it can be seen that the Information and Communication component reached an average of 2.5/5 being the lowest; considering it a critical component due to the grade obtained, 1 (never) after evaluating the existence of spaces for suggestions. In turn, the Supervision and Monitoring component was also considered a critical component since it obtained an average of 2.96/5 within the application average. Specifically, it obtained a score of 1 (never) when evaluating the existence of written justifications for the acceptance or rejection of recommendations made by employees, customers, or suppliers. On the other hand, the information obtained from the hypotheses determined that the compliance of the Control and Supervision Environment and Monitoring components depend on the existence of an audit department.