diff --git a/R/settings.R b/R/settings.R
index 7e47ffb8d..801cf596d 100644
--- a/R/settings.R
+++ b/R/settings.R
@@ -22,13 +22,13 @@ read_settings <- function(filename) {
   }
 
   if (!is.null(config_file)) {
-    f <- function(e) {
+    malformed <- function(e) {
       stop("Malformed config file, ensure it ends in a newline\n  ", conditionMessage(e), call. = FALSE)
     }
-    tryCatch(
-      config <- read.dcf(config_file, all = TRUE),
-      warning = f,
-      error = f
+    config <- tryCatch(
+      read.dcf(config_file, all = TRUE),
+      warning = malformed,
+      error = malformed
     )
   } else {
     config <- NULL
@@ -69,7 +69,7 @@ find_default_encoding <- function(filename) {
     return(NULL)
   }
 
-  root_path <- find_rproj_or_package(filename)
+  root_path <- find_package(filename, allow_rproj = TRUE)
   rproj_enc <- get_encoding_from_dcf(find_rproj_at(root_path))
   if (!is.null(rproj_enc)) {
     return(rproj_enc)
diff --git a/R/settings_utils.R b/R/settings_utils.R
index 40465927e..237d34f2c 100644
--- a/R/settings_utils.R
+++ b/R/settings_utils.R
@@ -3,24 +3,20 @@ has_description <- function(path) {
   !is.na(desc_info$size) && desc_info$size > 0.0 && !desc_info$isdir
 }
 
-find_package <- function(path) {
-  path <- normalizePath(path)
-  depth <- 2L
-  while (!has_description(path)) {
-    path <- dirname(path)
-    if (is_root(path) || depth <= 0L) {
-      return(NULL)
-    }
-    depth <- depth - 1L
-  }
-  path
+has_rproj <- function(path) {
+  length(Sys.glob(file.path(path, "*.Rproj"))) > 0L
 }
 
-find_rproj_or_package <- function(path) {
-  path <- normalizePath(path, mustWork = FALSE)
+find_package <- function(path, allow_rproj = FALSE, max_depth = 2L) {
+  path <- normalizePath(path, mustWork = !allow_rproj)
+  if (allow_rproj) {
+    found <- function(path) has_description(path) || has_rproj(path)
+  } else {
+    found <- function(path) has_description(path)
+  }
 
-  depth <- 2L
-  while (!(has_description(path) || has_rproj(path))) {
+  depth <- max_depth
+  while (!found(path)) {
     path <- dirname(path)
     if (is_root(path) || depth <= 0L) {
       return(NULL)
@@ -30,10 +26,6 @@ find_rproj_or_package <- function(path) {
   path
 }
 
-has_rproj <- function(path) {
-  length(head(Sys.glob(file.path(path, "*.Rproj")), n = 1L)) == 1L
-}
-
 find_rproj_at <- function(path) {
   head(Sys.glob(file.path(path, "*.Rproj")), n = 1L)
 }
diff --git a/tests/testthat/test-settings.R b/tests/testthat/test-settings.R
index 3ee128c02..0a0d87ca1 100644
--- a/tests/testthat/test-settings.R
+++ b/tests/testthat/test-settings.R
@@ -102,7 +102,7 @@ test_that("it has a smart default for encodings", {
   pkg_file <- test_path("dummy_packages", "cp1252", "R", "cp1252.R")
 
   expect_identical(
-    normalizePath(find_rproj_at(find_rproj_or_package(proj_file)), winslash = "/"),
+    normalizePath(find_rproj_at(find_package(proj_file, allow_rproj = TRUE)), winslash = "/"),
     normalizePath(test_path("dummy_projects", "project", "project.Rproj"), winslash = "/")
   )
   expect_identical(