Final answer:
The effectiveness of a company's internal controls is assessed using the framework established by the Committee of Sponsoring Organizations of the Treadway Commission. This framework is part of comprehensive corporate governance measures and was underscored by the need to prevent accounting fraud as highlighted by the Sarbanes-Oxley Act of 2002.
Step-by-step explanation:
The framework that is used to assess the effectiveness of a company's internal control was established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO's framework is widely accepted as a leading framework for designing, implementing, and conducting internal control and assessing its effectiveness.
This plays a crucial role in corporate governance, alongside the board of directors and auditing firms, by providing a structured approach for ensuring effective oversight and management of a company's operations and for protecting the interests of its stakeholders.
The push for a robust framework such as COSO's was partly due to major accounting scandals, such as those involving Enron and WorldCom, which led to corporate governance failures and the enactment of the Sarbanes-Oxley Act in 2002, designed to increase investor confidence in public corporation financial information.