^{fn 7} Because the objective is external financial reporting and this is a US-based Securities Exchange Commission (SEC) registered company, this scenario uses terms as defined by SEC in the United States (Rule 12b-2 2 [17 CFR 240.12b-2] under the Securities and Exchange Act of 1934), "significant deficiency" and "material weakness." Therefore, in this scenario management has customized the templates to reflect this classification. "Material weakness" means a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis.