Which of the following describes the environment in internal control?
A) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.
B) The environment is the "tone at the top" of the business.
C) The environment is designed to ensure that the business earns profit.
D) A company must identify its risks.

Question

Quizplus · Accepted Answer

The environment in internal control refers to the tone set by management and the overall attitude towards internal control within the organization. This includes the ethical values of the company and its commitment to integrity and accountability. Option A is describing the role of auditors in monitoring internal controls, which is different from the environment in which controls operate. Option C is incorrect as the primary goal of internal control is not to earn profit, but to safeguard assets and ensure accurate financial reporting. Option D is a necessary step in developing effective internal controls, but it does not describe the environment in which they operate.

Which of the Following Describes the Environment in Internal Control