[Anonymous]

Hello Everyone !

Any Internal Auditors out there? I was wondering what you guys do about findings and whether you guys report them to management or not based on Materiality considerations.

My question is: Do you use a Materiality calculation to assess materiality in order to make decisions about whether to address certain items with management or not?

I know that this is not public accounting, but do you combine all your findings through the year to see if all these findings combined may effect your decision?

Thanks for your input !

Only guidance I found from the IIA Standards was the following under 1220 – Due Professional Care:

Internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor. Due professional care does not imply infallibility.

1220.A1 – Internal auditors must exercise due professional care by considering the:

Extent of work needed to achieve the engagement’s objectives;

Relative complexity, materiality, or significance of matters to which assurance procedures are applied;

Adequacy and effectiveness of governance, risk management, and control processes;

Probability of significant errors, fraud, or noncompliance

[ruggercpa2b]

Are you asking in practice or for the exam?

I work in IA and for most of the financial stuff that we review our departments decides on what is material. And then depending on the reporting structure any findings we have we tell the process owners and then have a report that goes out to CFOs and CEOs.

AUD - 73, 72 retake 7/2/2016
BEC - 8/20/2016
REG - TBD
FAR - TBD

I am so ready for this nightmare to be over. Been at this way too long.

[TNCPA16]

We calculate materiality based on a percentage of budgeted net revenue for each facility under audit.

[Anonymous]

Excuse my late reply, Thanks guys, Its interesting to hear what you guys do.

@ruggercpa2b this is for in practice, not for exam purposes.

He's my question, how conservative should internal auditors be – when compared to External auditors?

I have no idea what they deem as material, but got The 1998 version of the KPMG materiality formula from this document: its very informative if you would like to look at a few rules of thumb for materiality:

https://brage.bibsys.no/xmlui/bitstream/handle/11250/166032/A51_00.pdf?sequence=1

Thanks again for your thoughts!

[Author]

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