Question

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 ________.

Answer 1

Answer: Material weakness

Explanation: Material weakness is defined as lack or insufficient internal control. This inadequacy in control can occur in the activities, functioning ,design,statement of finance etc.This can result in the ineffective assessing of the financial statement and material misstatement.

While the process of auditing , material weakness can be detected and corrected by taking the adequate steps by auditor committee people.This will help in filling any loop hole of material weakness as well as material misstatement will not occur in the financial statement.