RISK-BASED METHODOLOGY FOR CALCULATING MATERIALITY IN INTERNAL AUDITS OF BUDGETARY ORGANIZATIONS
DOI:
https://doi.org/10.5281/zenodo.21177680Keywords:
internal audit, materiality level, audit risk, performance materiality, materiality base, risk-based auditing, budgetary organization, public sector.Abstract
The article analyzes the problem of determining the materiality level in internal audits of budgetary
organizations and finds that, in practice, it is often set subjectively without documented calculation. To address
this issue, a methodology linking materiality to the level of audit risk is proposed. Overall materiality is calculated
using the formula M_overall = Base × F(R), where F(R) is a risk-dependent percentage. Performance materiality
is determined as M_perf = M_overall × k, where k = 0.50–0.75. In addition, a three-tier materiality structure is
introduced. The proposed methodology links audit scope and sample size to the level of risk and ensures the
international comparability of audit results.
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