Which of the following would indicate a strong control environment?

• A. Management demonstrates integrity and ethical values in their actions.
• B. Employees are not provided with clear job descriptions.
• C. There is little oversight by the board of directors.
• D. Policies and procedures are rarely communicated to staff.

Answer: (A)

Verified step by step guidance

1. Understand the concept of a 'control environment' in financial accounting. It refers to the overall attitude, awareness, and actions of management and employees regarding internal controls and their importance.
2. Recognize that a strong control environment is characterized by management's commitment to integrity, ethical values, and accountability. This sets the tone for the organization and influences the control consciousness of its people.
3. Evaluate each option provided in the problem. For example, management demonstrating integrity and ethical values aligns with a strong control environment, while the other options (lack of job descriptions, little oversight, and poor communication of policies) indicate weaknesses in the control environment.
4. Consider how management's actions and ethical behavior impact the organization's ability to maintain effective internal controls and prevent fraud or errors.
5. Conclude that the correct answer is the option that reflects management's demonstration of integrity and ethical values, as this is a key indicator of a strong control environment.