Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before assessing control risk, Johnson is required to obtain an understanding of Rose's control environment. Required: a. Identify principles of internal control (in addition to the factors illustrated in the following example) that set th tone of an organization, influencing the control consciousness of its people. b. For each control environment factor identified in part (a), describe the components and why each component would be of interest to the auditor. Use the following format: Integrity and Ethical Values of controls cannot rise above the integrity and ethical values of the people who create, administer, and monito

Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before assessing control risk, Johnson is required to obtain an understanding of Rose's control environment. Required: a. Identify principles of internal control (in addition to the factors illustrated in the following example) that set th tone of an organization, influencing the control consciousness of its people. b. For each control environment factor identified in part (a), describe the components and why each component would be of interest to the auditor. Use the following format: Integrity and Ethical Values of controls cannot rise above the integrity and ethical values of the people who create, administer, and monito

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before
assessing control risk, Johnson is required to obtain an understanding of Rose's control environment.
Required:
a. Identify principles of internal control (in addition to the factors illustrated in the following example) that set the
tone of an organization, influencing the control consciousness of its people.
b. For each control environment factor identified in part (a), describe the components and why each component
would be of interest to the auditor. Use the following format:
Integrity and Ethical Values
The effectiveness of controls cannot rise above the integrity and ethical values of the people who create, administer, and monitor
them. Integrity and ethical values are essential elements of the control environment, affecting the design, administration, and
and behavioral standards,
monitoring of other components. Integrity and ethical behavior are the products of the entity's ethi
how they are communicated, and how they are reinforced in practice.

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