COSO Component 1: Control Environment
The Foundation of Internal Control
The control environment establishes the organization's ethical culture and influences the effectiveness of all other internal control components. It reflects management's attitude toward integrity, ethics, competence, and accountability.
- Commitment to integrity and ethical values.
- Independent board oversight.
- Appropriate organizational structure.
- Assignment of authority and responsibility.
- Competent employees and accountability.
Tip
Think of the control environment as the 'tone at the top' established by management.
Summary
A strong control environment supports all other aspects of internal control.