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The control environment includes:
ACommitment to integrity and ethical values, board oversight, structure, authority, HR competence
BOnly the IT firewalls
COnly the production-floor safety rules
DOnly the marketing strategy
Answer & Solution
Correct answer: A. Commitment to integrity and ethical values, board oversight, structure, authority, HR competence
1. COSO control environment has 5 principles spanning ethics, oversight, structure, competence, accountability.
2. Firewalls, safety, marketing are operational matters, not control environment.
3. The control environment is the foundation of internal control.
_Source: ICAI BoS CA Final Paper 3, Ch 3 "Risk Assessment and Internal Control"_
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