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Which of the following is not a factor that is considered a part of the client's overall control environment?

1) The organizational structure.
2) The information system.
3) Management philosophy and operating style.
4) Board of directors.

User Djbp
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8.3k points

2 Answers

7 votes

**Final Answer:**

The information system (Option 2) is not considered a factor that is part of the client's overall control environment.

**Explanation:**

The client's overall control environment encompasses various factors that contribute to the organization's internal control framework. The information system, while crucial for the organization's operations, is not directly part of the control environment. The control environment focuses on broader aspects such as the organizational structure, management philosophy and operating style, and the role of the board of directors.

The organizational structure (Option 1) is a key factor in establishing lines of authority and responsibility within an organization. It defines how tasks are organized and delegated, impacting the overall control environment. Management philosophy and operating style (Option 3) reflect the values and principles guiding managerial decisions, influencing the control environment's tone and effectiveness. The board of directors (Option 4) plays a pivotal role in governance and oversight, contributing significantly to the control environment by providing strategic direction and ensuring accountability.

On the other hand, the information system, though integral for data processing and management, is more aligned with the control activities and information and communication components of internal control. While the information system supports these elements, it is not a direct component of the control environment. Therefore, Option 2, the information system, is the correct choice as it falls outside the scope of factors considered part of the client's overall control environment.

User Paul Rouget
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8.4k points
3 votes

Final answer:

The factor that is not considered a part of the client's overall control environment is the information system.So the correct option is 2.

Step-by-step explanation:

The factor that is not considered a part of the client's overall control environment is the information system.

The organizational structure, management philosophy and operating style, and board of directors are all factors that contribute to the client's control environment.

The control environment refers to the overall attitude, awareness, and actions of management and employees regarding the importance of internal control.

For example, the organizational structure determines the lines of authority and reporting within the organization,

while the management philosophy and operating style shape the company's values and principles.

The board of directors provides oversight and guidance to ensure effective control and accountability.

So the correct option is 2.

User Remonia
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8.2k points