Question

give a couple of brief example of what management can do to establish a positive control environment and why this is important to do also how can such things be properly communicated and /or enforced by management within a company among employees

Answer 1

Control Environment- It is the atmosphere of organization where people work within their capacity and carry out their control responsibilities. It shows the value of organization.

Examples of establishing a positive control environment: Are as following:

1. By establishing the proper communication of policies, values and principles among the employees and management.
2. By establishing the code of ethics in the organization and tell employees, their importance.
3. By establishing proper internal control techniques so that there may be no chance of fraudulent practices.
4. By establishing a sound relationship between managers and their subordinates so that nobody will think himself superior and all people work for a common goal and betterment of company.

Importance of positive control environment - Are as following:

• It reduces the risk of fraud and material misstatement in the financial statements.
• It provides strength to company and also increases brand value.
• It provides a positive work culture to employees and they work by taking into consideration ethics and values.
• By doing this, company keeps its stakeholders happy and company saves itself from penalties.