SAS 112/115 Overview

Categories of Control Deficiencies

Statement of Auditing Standards No. 112/115 (SAS 112/115) introduced definitions of significant deficiency and material weakness that lowered the threshold for reportable control deficiencies during the course of an external audit at UCD.

1. Control deficiencies

These exist 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 in a timely manner. Materiality of the control deficiency is not just determined by the actual misstatement (i.e., dollar amount of the error), but by the potential dollars that could also be incorrect.

Examples of control deficiencies include:

  • Lack of timeliness of cash deposits and account reconciliation
  • Lack of review and reconciliation of departmental expenditures
  • Lack of overdraft funds monitoring
  • Lack of physical inventory

2. Significant deficiencies

Significant deficiencies are a control deficiency, or combination of control deficiencies, that adversely affect the entity's ability to initiate, authorize, record, process, or report financial data reliably in accordance with Generally Accepted Accounting Principles (GAAP) such that there is more than a remote likelihood that a misstatement of the entity's financial statements (that is more than inconsequential) will not be prevented or detected.

3. Material weakness

Material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.

All university departments must work together to protect UCD with controls that support financial reporting and ensure that key controls are in place and operating as intended.

Supplemental content

Controls & Accountability