Factors Influencing the Control of Environment

Procurement and Audit notes revision

a) The function of the board of directors or the audit committee. The control environment is significantly influenced by the effectiveness of the board of directors or the audit committee. This effectiveness is determined by the extent of its independence from management, experience and status of members and the extent to which it raises and pursues difficult matters with management and also its relationship with internal and external auditors.
b) Management philosophy, style and ease with which managers could override controls.
c) The implementation of organizational structure and methods of assigning authority and responsibility. This determines how well employees understand the limits placed upon their powers and responsibilities. The objective is to separate responsibility for authorizing a transaction, keeping records for the transaction and custody of assets acquired from the transaction.
d) Personnel policies and procedures. Employees should be recruited on basis of skills and knowledge essential for the performance of their jobs and if necessary, be trained
Procurement and Audit notes revision

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