Internal controls minimize risk of fraud and control deficiencies:
Fraud: Fraud includes (a) a misstatement arising from financial reporting that is intentional, or an omission of amounts or communications to deceive users of financial information; and (b) misstatements arising from or the misappropriation of University assets.
Control Deficiency: A control deficiency exists when the design or operation of a control will not allow for management or employees to prevent, detect ,or correct financial information on a timely basis. Control deficiencies may be a significant deficiency or a material weakness.
Significant Deficiency: A significant deficiency in the design or operation of internal controls that could adversely affect a department’s ability to initiate, record, process, and report financial data consistent with the University’s policies, procedures, and practices. Although the control deficiency is less severe than a material weakness, it is important enough to merit attention.
Material Weakness: A reportable condition for which the design or operation of internal control components cannot be relied on to prevent or detect errors within a timely period by employees, in the normal course of performing their assigned functions. There is reasonable possibility the weakness may result in a material misstatement in the financial statement.