The "Control Environment" refers to the overall atmosphere and culture within an organization that influences how risks are managed and controls are implemented. It includes the values, ethics, and governance structures that guide employees' behavior and decision-making. A strong control environment promotes accountability and integrity, ensuring that everyone understands their roles in maintaining effective internal controls. Key components of the control environment include management's philosophy, organizational structure, and human resource policies. These elements work together to establish a foundation for effective risk management and compliance with laws and regulations. A positive control environment enhances the effectiveness of other internal controls and supports the organization's objectives.