Download Full Text (543 KB)
Management, audit committees, and others repsonsible for internal control in an entity have indicated that they have difficulty understanding the auditor's report on material weaknesses in internal control identified in a financial statement audit. These users, and many auditors, also have indicated that the concept of a material weakness in internal control is ambiguous and, therefore, difficult to apply in practice. They also believe that because the concept relates only to material misstatements of financial statements, some significant internal control deficiencies may not be reported. This proposed statement on auditing statnadards would clarify report language and replace the concept of material weakness in internal control with a broader, more operational concept of reportable internal control conditions.
Auditing, Internal --Standards -- United States
Accounting | Taxation
American Institute of Certified Public Accountants. Auditing Standards Board, "Proposed statement on auditing standards : the communication of control-structure related matters noted in an audit;Communication of control-structure related matters noted in an audit" (1987). Statements of Position. 498.