US CMA Part 1 · Chapter 5 · Question 13 of 23
How does a significant deficiency in internal control over financial reporting differ from a material weakness?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) It is less severe than a material weakness, yet important enough to merit the attention of those responsible for oversight of financial reporting
Explanation
Deficiencies are graded by severity: control deficiency, significant deficiency and material weakness. A significant deficiency should be communicated to the audit committee, but only a material weakness prevents management from concluding that ICFR is effective.
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