What is a Control Environment?
In order to promote regulatory uniformity between various sectors of the financial services industry, the concept of a “control environment” has been introduced to the industry.
The concept consists of the sum of the various protective measures taken, often referred to as “control activities”, to ensure that actions taken on behalf of an entity are taken to further the stated purposes of the entity and not against those stated purposes or for the benefit of others: fixed decision-making processes, documentation of compliance with said processes, separation of functions and oversight mechanisms (reporting, financial audit, operational audit, custodian/ depositary oversight, regulatory oversight).
Registration of Management Companies & Funds | AlphaLAW
Over the time, any asset manager who does more than plan to manage own assets faces the problem of a transparent and convenient management infrastructure.
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Control activities are those protective measures in business and financial processes which help prevent errors and omissions from occurring or which detect when errors or omissions have occurred.
