ACCA Applied Knowledge · Business and Technology · Internal controls
Which of the following best describes the control environment of an organisation?
The control environment is the overall attitude, awareness and actions of directors and management towards internal control, setting the tone for the organisation. It is the foundation for other controls, whereas reconciliations and physical security are specific control activities.
- AThe overall attitude, awareness and actions of directors and management regarding internal control, which set the tone for the organisationCorrect
- BThe specific procedures used to reconcile ledger accounts to supporting records
- CThe testing of controls carried out by the external auditor at year end
- DThe physical security measures protecting premises and assets
Explanation
The control environment is the foundation of internal control, reflecting management's attitude and ethical tone, and governance structure. Reconciliations and physical security are individual control activities, and auditor testing is an external assurance activity.
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