Final answer:
Internal controls, as defined by COSO, do not explicitly include a reasonable degree of transparency as a category. They are instead focused on the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations. The board of directors, auditing firms, and outside investors all play a role in overseeing these objectives.
Step-by-step explanation:
COSO defines "internal controls" as a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives. These objectives fall into certain categories which include the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. However, a reasonable degree of transparency is not explicitly mentioned by COSO as a category for internal control objectives. Instead, transparency is an underlying principle that supports these objectives.
Corporate governance plays a critical role in overseeing these objectives and includes institutions such as the board of directors, the auditing firms, and outside investors, all of which can influence internal controls. In the case of Lehman Brothers, corporate governance failed to provide the transparency and accuracy in financial reporting requested by investors.