Which of the following statements accurately describes the difference between a 'reportable condition' under the old standards and a 'significant deficiency' under current AU-C 265?

Answer options:

Reportable conditions were more severe than material weaknesses.

The term 'reportable condition' is obsolete; 'significant deficiency' and 'material weakness' are the current defined terms for communication.

Significant deficiencies do not need to be communicated in writing, whereas reportable conditions did.

There is no difference; the terms are interchangeable.

How to approach this question

Knowledge recall. 'Reportable condition' is an old term. Current terms are 'Significant Deficiency' and 'Material Weakness'.

Full Answer

B.The term 'reportable condition' is obsolete; 'significant deficiency' and 'material weakness' are the current defined terms for communication.✓ Correct

AU-C 265 eliminated the term 'reportable condition'. The definitions are now 'Significant Deficiency' (less severe than material weakness but merits attention) and 'Material Weakness' (reasonable possibility of material misstatement).

Common mistakes

Using old terminology.

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