What is Significant deficiency?
In short
A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness yet important enough to merit the attention of those charged with governance.
Key takeaways
- Significant deficiencies and material weaknesses identified in an audit must be communicated in writing to management and those charged with governance.
- The written communication is usually made by the report release date and no later than 60 days after it.
- Severity depends on how likely and how large a misstatement could be, not on whether one 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
At the end of an audit, the auditor identified no significant deficiencies or material weaknesses. With respect to written communication, the auditor should NOT: