Final answer:
Significant deficiencies in internal control are issues that auditors must report to an organization's audit committee because they represent significant flaws in the design or operation of internal control that could negatively impact the accuracy and timeliness of financial reporting, lead to material misstatements, or breach compliance with laws and regulations. The correct option isc. Significant deficiencies in the design or operation of internal control.
Explanation:
Internal control is a system of policies, procedures, and practices designed to ensure the reliability and integrity of financial reporting, prevent and detect fraud, and promote operational efficiency. Significant deficiencies in internal control refer to material weaknesses or significant shortcomings in the design or operation of internal control that could adversely affect the entity's ability to record, process, summarize, and report financial information accurately and timely.
These deficiencies could also result in a material misstatement of the financial statements or a breach of compliance with laws and regulations. Auditors are required to communicate these significant deficiencies to the audit committee as part of their responsibility to provide timely and meaningful information about the entity's financial reporting processes and internal control effectiveness.
The audit committee, in turn, is responsible for overseeing the entity's internal control system and taking appropriate actions to address any significant deficiencies identified by the auditor.
According to the Generally Accepted Auditing Standards (GAAS), auditors are required to communicate significant deficiencies in internal control to the audit committee as part of their responsibility to provide timely and meaningful information about the entity's financial reporting processes and internal control effectiveness.
Therefore, The correct option is c. Significant deficiencies in the design or operation of internal control.