[Verse 1]
When controls break down in the system we trust
Auditors must evaluate what's been discussed
Three levels of concern rise from the dust
Deficiency, significant, material - assess we must
Look at likelihood first, will errors occur?
Then magnitude matters, how much could transfer?
Remote or probable, the chances we measure
Small or pervasive, the impact we treasure
[Chorus]
Like-li-hood and mag-ni-tude
Two dimensions, attitude
Deficiency starts the scale
Significant makes us pale
Material weakness fails
Control evaluation never stales
Rate the risk, classify the flaw
Framework guides what auditors saw
[Verse 2]
A deficiency exists when controls don't work right
Design flaws or operation out of sight
But impact stays small, likelihood stays light
Basic level concern in the auditor's sight
Significant deficiency takes the next step
Important enough that we cannot accept
Less than material but demands our prep
Management attention, a warning we've kept
[Chorus]
Like-li-hood and mag-ni-tude
Two dimensions, attitude
Deficiency starts the scale
Significant makes us pale
Material weakness fails
Control evaluation never stales
Rate the risk, classify the flaw
Framework guides what auditors saw
[Bridge]
Material weakness rings the loudest bell
Reasonable possibility, we can tell
Material misstatement could result
Financial reporting bears the fault
Board and audit committee must know
Disclosure requirements help us show
The severity level that we've found
Through testing that was thorough and sound
[Verse 3]
Compensating controls might reduce the grade
Alternative procedures, carefully made
But if gaps remain that can't be stayed
Higher classification must be displayed
Document the reasoning, support each call
Risk assessment matrix shows it all
From minor issues to controls that fall
Professional judgment guides us through it all
[Chorus]
Like-li-hood and mag-ni-tude
Two dimensions, attitude
Deficiency starts the scale
Significant makes us pale
Material weakness fails
Control evaluation never stales
Rate the risk, classify the flaw
Framework guides what auditors saw
[Outro]
Three levels rise from weak to strong
Likelihood and magnitude all along
Control deficiency evaluation song
Helps CPAs get classification right, not wrong