Which feature belongs mainly to the control environment component of internal control?
Correct answer: A. Management’s commitment to integrity and ethical values
- A. Management’s commitment to integrity and ethical values
- B. A schedule comparing actual and budgeted expenses
- C. A procedure for identifying new business risks
- D. A report listing exceptions in reconciliations
Explanation
The control environment reflects management’s attitude, ethical values, governance, and commitment to competent personnel. Budgets, risk identification, and exception reports relate more directly to other control components.
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Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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