The Control Environment

The control environment, as established by the organization’s administration, sets the tone of an institution and influences the control consciousness of its people. Likewise, leaders of each department, area or activity establish a local control environment. This is the foundation for all other components of internal control, providing discipline and structure. Control environment factors include:

• Integrity and ethical values;
• The competence of the organization’s people;
• Leadership philosophy and style; and
• Assignment of authority and responsibility.