Which type of deficiency occurs when a properly designed control does not operate as designed?

The type of deficiency that occurs when a properly designed control does not operate as intended is known as a deficiency in operation. This implies that the control mechanism, although appropriately conceived, fails to be executed or performed correctly in practice. This can happen due to various factors, such as human error, lack of compliance, or inadequate training of staff, leading to the control not functioning effectively in its intended environment.

In the context of auditing and internal controls, identifying deficiencies in operation is critical because it highlights the potential risk of misstatements in financial reporting or operational inefficiencies. Recognizing that a control was designed properly but is not executed as required helps organizations focus on corrective measures to enhance performance and mitigate risks associated with operational lapses. Understanding this distinction is essential for maintaining robust internal control systems and ensuring compliance with financial regulations.