TABLE OF CONTENTS Internal control of an organization begins with the control environment. Control environment is one of the five components of the COSO Integrated Framework. It provides the foundation for an organization's internal control and much more. Control environment and corporate culture are woven together and provide the fiber for continuous improvement. This is an organization requirement extending beyond compliance with the Sarbanes-Oxley Act.
Control environment sets the tone for leadership and the pursuit of reality and integrity throughout the organization. These challenges are explored together with how the motivation of Sarbanes-Oxley blends with management philosophy and the creation of organizational knowledge. The tone of the organization extends from the top to people at all levels of the company. The overall control environment drives integrity, ethical value, and competence of people throughout the company. Beyond internal control, the control environment provides the blueprint for organizational action on a pathway to continuous compliance and improvement.
Internal control is a process that is effected by people. The foundation begins at the top of the entity with the board of directors, management, and other key people. This is where responsibility for the design and maintenance of internal control begins so that it can be applied consistently throughout the organization. A good system of internal control starts with the right people. It is their responsibility to individually and collectively focus on the proper details to achieve the organization's objectives. The leadership of the entity directly impacts the rest of the organization by what...
