Question

A material weakness is a situation in which Multiple Choice

A) There is a remote likelihood that a material misstatement would be detected on a timely basis.
B) It is reasonably possible that an immaterial misstatement would not be detected on a timely basis.
C) It is reasonably possible that a material misstatement would not be detected on a timely basis.
D) It is probable that an immaterial financial statement misstatement would not be detected on a timely basis.

Answer 1

C) It is reasonably possible that a material misstatement would not be detected on a timely basis.

Step-by-step explanation:

"A material weakness 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 company's annual or interim financial statements will not be prevented or detected on a timely basis."

Reference: Public Company Accounting Oversight Board. “Auditing Standard No. 5.” Auditing Standard No. 5, 2019