Peterson, CPA, is auditing the financial statements of a publicly held manufacturing company, Amalgamated Products, Inc. In complying with the PCAOB standards, Peterson seeks to obtain an understanding of Amalgamated’s control environment.

Required

a. Identify the control environment factors that can impact the effectiveness of the other components of internal control.

b. What effect may the preliminary audit strategy have on the required level of understanding of the control environment factors?