4 Indicators of a Material Weakness

An auditor might report a material weakness in a company's internal controls for any of the following reasons:

1. In the course of the audit, the auditor finds a material misstatement that was not detected by the internal controls

2. The auditor learns that the audit committee is not exercising oversight over financial reporting and internal controls

3. The company issues an accounting restatement to correct a material misstatement from the past

4. The auditor discovers that a member of senior management has committed fraud (it doesn't matter whether the fraud is material)

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