COSO was organized in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, an independent private-sector initiative that studied the causal factors that can lead to fraudulent financial reporting. It also developed recommendations for public companies and their independent auditors, for the SEC and other regulators, and for educational institutions.
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The National Commission was sponsored jointly by five major professional associations ​headquartered in the United States: the American Accounting Association (AAA), the American Institute of Certified Public Accountants (AICPA), Financial Executives International (FEI)​, the Institute of Internal Auditors (IIA), and the National Association of Accountants, now known as Institute of Management Accountants (IMA). Wholly independent of each of the sponsoring organizations, the Commission included representatives from industry, public accounting, investment firms, and the New York Stock Exchange. To this day, COSO functions as a committee of the five Board Members led by its Chairman of the Board. The operations of the Committee and COSO overall are supported by the resources of the five Sponsoring Organizations.

The first chairman of the National Commission was James C. Treadway, Jr., Executive Vice President and General Counsel, Paine Webber Incorporated and a former Commissioner of the U.S. Securities and Exchange Commission. Hence, the popular name "Treadway Commission" Currently, the COSO Chairman is Lucia Wind.

COSO’s goal is to provide thought leadership dealing with three interrelated subjects: Enterprise Risk Management (ERM), Internal Control, Fraud Deterrence and Governance.