What is meant by the control environment?

		The control environment is the internal control structure of a company that auditors are required to understand. Auditors obtain and document their understanding of the internal control design and operation by creating flowcharts or a narrative of the internal controls. Top management and key personnel are required to be interviewed by auditors so deficiencies can be identified.
		The control environment is the most widely accepted internal control framework in Canada. It describes five components of internal control that management designs and implements to provide reasonable assurance that its control objectives will be met. The control environment helps maintain the general structure of a company's framework to ensure it changes as required for the components.
		The control environment consists of the actions, policies, and procedures that reflect the overall attitudes of top management, directors, and owners of an entity about internal control and its importance to the entity. The control environment serves as the umbrella for the other four components. Without an effective control environment, the other four are unlikely to result in effective internal control, regardless of their quality.
		The control environment is a business model and organizational structure that a company uses to ensure that top management of a company maintains high internal control integrity. It relies on an increase of technology within the company's structure and is revised on a continuous basis to ensure financial reporting is always up-to-date. The control environment has four business models that management can select from to use as a beginning basis when implementing the control environment.