Antecedents, Characteristics and Consequences of Internal Control Weaknesses and the COSO (2013) Framework

The main thesis of our study is to provide a comprehensive review on the disclosure of Internal Control Weaknesses (ICWs) reported under the Sarbanes-Oxley Act of 2002. More specifically, we classify research on ICWs into three main streams: (1) antecedents, (2) characteristics and (3) consequences of ICWs. Throughout the review, we refer to the multifaceted aspects of the disclosure of ICWs on various important topics such as corporate governance, financial reporting quality, audit quality and information asymmetry. We also discuss the possible implications of the 2013 updated Committee of Sponsoring Organizations (COSO) internal control-integrated framework on accounting literature. Our review and framework help researchers as well as policy makers to better understand the mechanisms by which the existence, discovery and disclosure of ICWs affect the U.S. firms. Further, this study provides avenues for future research and helps regulators and policy makers in setting standards and provisions related to internal controls