What is Control environment?

The foundation of internal control: the attitude of an organisation's management and those charged with governance toward control, the importance they attach to it, and their actual conduct. The control environment determines how strong the "habit of following the rules" is across the whole organisation. When planning the audit, the auditor assesses this first: if the environment is strong, the likelihood that the other control measures work reliably increases; if it is weak, the risk of errors and abuse rises, so the auditor performs additional procedures. In small organisations the environment is often informal, and the auditor also studies it through conversation with the owner or manager.

Source: Xalqaro audit standarti (XAS) 315 "Jiddiy noto'g'ri ko'rsatish risklarini aniqlash va baholash"; ISA (UK and Ireland) 315 (2010), nazorat muhiti bo'limi