A deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis is best described as ________.
A)a material weakness
B)a significant deficiency
C)a material deficiency
D)a deficiency

Question

Quizplus · Accepted Answer

A deficiency that creates a reasonable possibility of a material misstatement in the financial statements is called a material weakness. "Significant deficiency" refers to a deficiency that is less severe than a material weakness. "Material deficiency" is not a commonly used term in internal control reporting. "Deficiency" is a general term that may refer to any weakness in internal control, regardless of its impact on financial reporting.

A Deficiency, or a Combination of Deficiencies, in Internal Control