Detailed Answer
Answer (C) is correct. Human resource policies and practices are part of the control environment. They relate to hiring, orientation, training, evaluating, counseling, promoting, compensating, and remedial actions. The control environment is the component that sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for the other components. Detection risk is not part of the control environment. It is the risk that the audit procedures will fail to detect material misstatements. Thus, detection risk is a function of the effectiveness of the procedures used by the auditor.
