Significant Deficiencies / Material Weaknesses 2271



  • Based on your experience, what are some examples of issues that were escalated as significant deficiencies, and material weaknesses?



  • out of topic abit, but what would be the general definition for

    • material weakness
    • significant deficiency
    • other deficiency…
      thank you.


  • A material weakness in internal control over financial reporting is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis (Exchange Act Rule 12b-2 and Rule 1-02 of Regulation S-X, 17 CFR 240.12b-2 and 17 CFR 210.1-02).
    A significant deficiency in internal control over financial reporting is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting (Exchange Act Rule 12b-2 and Rule 1-02 of Regulation S-X, 17 CFR 240.12b-2 and 17 CFR 210.1-02)
    A ‘normal’ deficiency is anything below the level of a significant deficiency.
    A good way to get some ideas may be looking at what other issuers have disclosed as material weaknesses or significant deficiencies in the past in their annual reports on form 10-K, 10-KSB or 20-F. As far as I recall complianceweek.com offers a collection of material weakness disclosure of companies (free trial period with automatic expiration)



  • hello gmerkl
    thank you for the prompt response…
    may i know where did you obtain all these information from?
    any particular website that in your opinion, is beneficial for newbies like myself?
    thank you…



  • I already quoted the sources in brackets in my last post. The first ones are the respective regulation and the sections and the second ones who start with 17 CFR are an alternative source in the Code of Federal Regulations (CFR).
    You can find the code of federal regulations on gpoaccess.gov under CFR. 17 refers to title 17 of the CFR, which deals with securities law.


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