Management is responsible for designing and maintaining its organizations internal control. In designing internal control, management must consider controls related to each of the five major internal control components: the control environment, risk assessment, the accounting information system, control activities, and monitoring.

Required:

1. Management is considering controls for the following three control environment factors. For each, describe how the factor contributes to effective internal control.

(a) Integrity and ethical values.

(b) Commitment to competence.

(c) Board independence and effective oversight.