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Governance, Risk, Audit & Privacy · Intermediate

Materiality

Significance of an item or error such that it could influence decisions of users of audit results.

Definition

In financial audits materiality is often quantitative; in IS audits it also considers qualitative factors such as the criticality of systems, sensitivity of data, and regulatory impact. Auditors use materiality to plan scope and evaluate findings.

Example

A weakness in privileged access to the general ledger is material even if no loss has occurred yet.

Exam tip

IS audit materiality is often qualitative, not just a dollar threshold.

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