Accounting Information Systems 7th Edition by Cynthia Heagy,Constance Lehmann

Exercise 23

Smith, CPA, has been engaged to audit the financial statements of Reed, Inc., a publicly held retailing company. Before assessing control risk, Smith is required to obtain an understanding of Reed's internal environment.
Required:
a. Identify the internal environment factors that establish the internal environment.
b. For each internal environment factor identified in Part (a), describe what would be of interest to the auditor.