What is Indicators of a material weakness?
In short
Certain findings strongly suggest a material weakness in internal control: fraud by senior management of any size, a restatement to correct a material misstatement, a material misstatement the entity's controls wouldn't have caught, and ineffective audit committee oversight.
Key takeaways
- The auditor still evaluates severity, but these usually lead to a material weakness conclusion.
- A material weakness requires an adverse opinion on internal control in an integrated audit.
- Material weaknesses are communicated in writing.
Where it's tested
AUD: Understanding the Entity & Internal Control — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A deficiency in internal control that is less severe than a material weakness but important enough to merit attention by those charged with governance is a: