CONTROL SIGNIFICANCE AND MATERIALITY AND CONTROL RISK

RATING SHEET Template #15

Purpose of the Template:

• Documents the rating process for the consideration of the control significance
and materiality and control risk
• Provides the initial ranking of control attributes for the prioritization of
potential audit areas

How to accomplish the Template

• Use your professional judgment in rating controls. Base your judgment on
sufficient and reliable evidence and information.
• The ranking should be agreed upon and discussed by Internal Audit staff to
level off understanding on the ranking done.

Guide in the use of the Template:

Element Guidance/Explanation
Reference - The source / workpaper containing the subject control
attribute
Activity No. - Reference No. of the control in the source / workpaper
Control - The specific control statement / attribute
Significance (S) - Rating considering the following:
- Impact on Control Objective (ICO) - If any of the control
objectives will not be met or will be adversely affected

- Impact on Overall Objective (IIO) - If there is failure, risk or

threat in the attainment of the mandated objective

- Expected Benefits (EB) - If there is opportunity for

improvement or accountability will be established

- Visibility (V) - Exposure to media, public or political scrutiny

Materiality (M) - Rating considering the following:

- Quantitative (Q) - With relative importance in amount or

quantity
- Magnitude of Consequence (MC) - With error, deficiency,
deviation, malicious intent or bad faith

Average (S) - The average of the ratings of the four (4) criteria under
Significance, computed as follows:

Average (S) = (ICO + IIO + EB + V) / 4

CONTROL SIGNIFICANCE AND MATERIALITY AND CONTROL RISK
RATING SHEET Template #15
Guide in the use of the Template:
Element Guidance/Explanation
Average (M) - The average of the ratings of the two (2) criteria under
Materiality, computed as follows:

Average (M) = (Q+ MC) / 2

Total S&M Average - The total average of the Significance and Materiality average
Rating ratings, computed as follows:

Total S&M Average Rating = [Average (S) + Average (M)] /2

Control Risk (CR) - Rating of the control risk, based on risk assessment (for IA
Unit’s planning purposes only)
Total SMCR Average - The total average rating of the Significance, Materiality and
Rating Control Risk, computed as follows:

Total SMCR Average Rating = (Total S&M Average Rating +

CR) / 2
Ranking - Priority / rank given to the control attribute, based on the
rating of control significance and materiality and control risk