Definitions of Control Deficiency, Significant Deficiency, and

30.6 - Definitions of Control Deficiency, Significant Deficiency, and Material Weakness (Rev. 331, Issued: 11-15-19, Effective: 10-01-19, Implementation: 12-17- 19) The terms below are definitions and reporting classifications for FMFIA and A-123 Internal Controls over Financial Reporting: CONTROL DEFICIENCY: A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A design deficiency 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. An operational deficiency exists when a properly designed control does not operate as designed or when the person performing the control is not qualified or properly skilled to perform the control effectively. Controls that are not properly designed shall be documented as a control deficiency in the control deficiency log. A deficiency in operations of a control exists if a properly designed control is not working as intended. SIGNIFICANT DEFICIENCY: A deficiency or combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. MATERIAL WEAKNESS: A deficiency or 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. NOTE: The terms Significant Deficiency and Material Weaknesses may also apply to FMFIA operational findings or issues. End Section 30.6 – Definitions of Control Deficiency, Significant Deficiency, and Material Weakness: Back to Table of Contents