Which statement defines a Significant Deficiency?

• A. Less severe than a material weakness, but important enough to merit attention
• B. A material weakness
• C. A control deficiency
• D. An insignificant finding

Answer: (A)

In evaluating internal controls over financial reporting, a significant deficiency describes a deficiency or combination of deficiencies that is less severe than a material weakness but important enough to merit attention by those responsible for oversight. This means the issue could affect timely or reliable detection of misstatements, and it warrants attention, though it does not rise to the level of a material weakness.

That’s why the described statement is correct: it captures the middle ground—not as severe as a material weakness, yet still significant enough to require governance awareness. An actual material weakness would be more severe, a plain control deficiency is typically less serious, and an insignificant finding wouldn’t merit attention.