A material weakness will always exist when a company has:
A) a decentralized structure and authority is shared in a system of matrix management.
B) an audit committee that provides ineffective oversight of financial reporting and ICFR.
C) a corporate culture with a strong emphasis on achieving profitability.
D) inexperienced workers serving in demanding positions.

Question

Quizplus · Accepted Answer

An ineffective audit committee oversight of financial reporting and ICFR can lead to material weaknesses in a company's internal controls over financial reporting. Material weaknesses are significant deficiencies in the design or operation of a company's internal controls that could result in a material misstatement of the financial statements. Therefore, company's audit committee should be effective in overseeing financial reporting and ICFR to prevent such deficiencies. None of the other options provided necessarily lead to material weaknesses.

A Material Weakness Will Always Exist When a Company Has