For each of the following independent cases, state the highest level of deficiency that you believe the circumstances representa control deficiency, a significant deficiency, or a mate- rial weakness. Explain your decision in each case. Subsequent to year-end, the auditors have determined that they believe that management has understated its warranty obligations. The auditors know that, according to the Professional Standards, they should consider the difference between managements estimate and the clos- est reasonable estimate as likely misstatement. The chief financial officer (CFO) has argued that this amount is reasonable. Yet, in fact, neither the auditors nor the CFO knows which amount is right. The CFO is under no particular pressure to meet an earnings forecast; he just thinks that the warranty obligations for many of the products will expire and will not be exer- cised. Still, the CFO cant convince the auditors. Likewise, the auditors cant convince the CFO of their position. The CFO finally agrees to a material adjustment to get to the auditors amount and keep the peace