Control Environment

Joseph F. Castellano and Susan S. Lightle point out in “Using Cultural Audits to Assess Tone at
the Top” (The CPA Journal, February 2005) that tone affects corporate culture by influencing
how top management might react to situational pressures, such as meeting internal budget
amounts or financial analysts’ earnings expectations. A strong control environment supported by
an ethical tone at the top is the cornerstone of a system of internal controls that supports the
financial reporting oversight role of the audit committee.