The profession has argued for decades about the advisability of mandatory reporting on internal control by public companies and by governmental entities. In the 1970s and 1980s, the main players in the debate were the Commission on Auditors' Responsibilities (the Cohen Commission), the AICPA, and the SEC, among others; their arguments were chronicled in L. M. Savoie and D. N. Ricchiute, "Reports by Management: Voluntary or Mandatory?" journal of Accountancy (May 1981), pp. 84-94. More recently, in addition to the AICPA and the SEC, new players, most supportive of mandatory reporting, have entered the debate, including the Commission on Fraudulent Financial Reporting (the Treadway Commission), the Committee of Sponsoring Organizations (COSO) of the Treadioay Commission, the U.S. General Accounting Office, and the Federal Deposit Insurance Corporation (FDIC), which, through the FDIC Improvement Act, requires public reporting for large federally insured banks and thrifts. "The COSO Report: Challenge and Counterchallenge," journal of Accountancy (February 1993), pp. 10-18, reprints two pointed letters exchanged by COSO and the GAO, some of which bears directly on the debate in the 1990s. Today, about one in four public companies and three in five Fortune 500 companies voluntarily report on internal control.

Required: 

Using the AICPA's National Automated Accounting Research System (NAARS) or copies of annual reports in a librarv, select an annual report that includes both management's report and the independent auditor's opinion on internal control, and draft a report that:

1. Explains the key issues addressed by management.

2. Compares the language used in the independent auditor's report to the language illustrated in the chapter from SSAE No. 2, "Reporting on an Entity's Internal Control Structure Over Financial Reporting."

3. Argues either for or against public reporting on internal control.