US CMA Part 1 · Chapter 5 · Question 12 of 23
Under PCAOB standards, a material weakness in internal control over financial reporting is a deficiency, or combination of deficiencies, such that:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) There is a reasonable possibility that a material misstatement of the financial statements will not be prevented, or detected and corrected, on a timely basis
Explanation
A material weakness exists when there is a reasonable possibility of a material misstatement not being prevented or detected and corrected in a timely manner. A significant deficiency is less severe but still important enough to merit the attention of those responsible for oversight.
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