Which of the following is not an element of an ethical corporate culture?

• A. Setting a proper tone at the top
• B. Establishing strong internal controls
• C. Having an effective internal audit function
• D. Having an effective external audit

Answer: (D)

An ethical corporate culture is built on leadership setting the right example and on mechanisms that embed integrity into day-to-day operations. Setting a proper tone at the top communicates expected values and behaviors throughout the organization, while establishing strong internal controls creates the environment and processes that prevent misconduct. An effective internal audit function supports this culture by independently assessing whether controls work as intended and whether ethics policies are being followed, feeding insights back into the governance process. Having an effective external audit, though important for external assurance of financial statements, does not directly shape the internal culture or daily ethical behavior within the organization. It serves as an outside check rather than a core driver of the culture, so it is not considered an element of an ethical corporate culture.