Internal controls are designed to provide reasonable assurance about the achievement of a businesss objectives in three key areas: the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. A deficiency in internal control exists when a control does not allow management or employees to prevent, or detect and correct, misstatements on a timely basis.

In an audit of financial statements, the auditor may identify deficiencies in the company's internal control over financial reporting. A control deficiency exists 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 on a timely basis.

Failure to identify or correct control deficiencies can be disastrous, damaging the integrity of financial reporting, eroding public and investor confidence, and destabilizing capital markets. A significant deficiency, which is one or more weaknesses in a company's financial reporting, warrants attention but is less likely to have an impact on the financial statements as with material weaknesses.