In short
A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement won't be prevented, or detected and corrected, on a timely basis.
Key takeaways
- A significant deficiency is less severe but still merits the attention of those charged with governance.
- Material weaknesses and significant deficiencies must be communicated in writing to management and those charged with governance.
- Severity depends on the possibility of misstatement, not on whether one actually occurred.
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: