Communicating Internal Control Related Matters Identified in an Audit – SAS No. 112

(Supersedes Statement on Auditing Standards No. 60, Communication of Internal Control Related Matters Noted in an Audit, as amended, AICPA, Professional Standards.)

This Statement on Auditing Standards (SAS) establishes standards and provides guidance on communicating matters related to an entity's internal control over financial reporting identified in an audit of financial statements. It is applicable whenever an auditor expresses an opinion on financial statements (including a disclaimer of opinion). In particular, SAS No. 112:

• Defines the terms significant deficiency and material weakness.
• Provides guidance on evaluating the severity of control deficiencies identified in an audit of financial statements.
• Requires the auditor to communicate, in writing, to management and those charged with governance, significant deficiencies and material weaknesses identified in an audit.

Also includes an appendix of examples of circumstances that may be control deficiencies, significant deficiencies, or material weaknesses.