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6 indicators of presence significant deficiency in internal control.

ISA 265 ” communicating  deficiencies in internal control to those charged with governance and management” states that deficiency in the internal control exists when:

  • A control is designed, implemented or operated in such a way that it is unable to prevent, or detect and correct, misstatements in the financial statements on a timely basis; or
  • A control necessary to prevent, or detect and correct, misstatements in the financial statements on the timely basis is missing.



Indicators of significant deficiencies include:

  • Ineffective response to identified significant risks
  • evidence of ineffective aspects of control environment.
  • Misstatement detected by the auditor’s procedures were not prevented, or detected and corrected by the entity internal control.
  • Correction of prior period misstatements arising due to fraud/error.
  • Management inability to oversee financial statements preparation;
  • Entity’s risk assessment process being ineffective or absent altogether.

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