What factors would you consider to determine if a deficiency, significant deficiency, or material weakness exists?
A control deficiency exists when the design or operation of a control does not prevent or detect misstatements on a timely basis.
• A deficiency in design exists when a control necessary to meet the control objective is missing or an existing control is not properly designed so that, even if the control operates as designed, the control objective is not always met.
• A deficiency in operation exists when a properly designed control does not operate as designed or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.
A significant deficiency is a control deficiency, or combination of control deficiencies, that affects the company's ability to initiate, authorize, record, process, or report external financial data reliably in accordance with GAAP such that there is more than a remote likelihood that a misstatement that is more than inconsequential will not be prevented or detected.
A misstatement is inconsequential if a reasonable person would conclude, after considering the possibility of further undetected misstatements, that the misstatement, either individually or when aggregated with other misstatements, would clearly be immaterial to the financial statements.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement will not be prevented or detected.
The auditor must communicate in writing, prior to the issuance of the auditor's report, to management and the audit committee all significant deficiencies and material weaknesses identified during the audit.

These written communications should include:
a. The definitions of significant deficiencies and