3 CPE Per Auditing Standard 5 (AS5), the auditor must evaluate the severity of each control deficiency to determine whether the deficiencies, individually or in combination, are material weaknesses. The key question to ask is…what parameters should be considered when determining materiality?
In planning and performing the audit, the auditor is not required to search for deficiencies that, individually or in combination, are less severe than a material weakness. There are several definitions of materiality utilized in the profession that are promulgated by the American Institute of Certified Public Accountants (AICPA), Public Company Accounting Oversight Board (PCAOB), Committee of Sponsoring Organizations (COSO) and others.
This course covers several aspects about the concepts of material weakness and significant deficiency. We evaluate recent cases of material weakness disclosures and updates from the PCAOB.
Information within this course comes from readily available public domain documents and is utilized by the trainer as a supplement for relaying the course content.
Note: The concepts outlined in this course are up to date and relevant in regards to the Sarbanes-Oxley legislation. Although there have not been any changes in the legislative concepts of the law since it’s release in 2002, some aspects of executing the work have evolved. This speaker is preparing a series of courses titled “Sarbanes-Oxley 20 years later”. Those courses can be found individually on the platform and would be beneficial for anyone involved with compliance.
NOTE: The Instructor has created 5 new segments on Sarbanes-Oxley Update - 20 Years Later:
Sarbanes-Oxley Update - 20 Years Later: Accounting Risk Assessment Considerations
Sarbanes-Oxley Update - 20 Years Later: Sourcing Emerging Risks Part 1
Sarbanes-Oxley Update - 20 Years Later: Evaluating Testing Processes
Sarbanes-Oxley Update - 20 Years Later: Sourcing Emerging Risks Part 2
Sarbanes-Oxley Update - 20 Years Later: Examining Fraud Risks
Learning Objectives
- Evaluate the various definitions of deficiencies utilized by the Committee of Sponsoring Organizations, Audit Clarity Standard 325 and Auditing Standard 5.
- Identify methods to assess deficiency impact and distinguish between a significant deficiency and a material weakness.
- Explore the concept of deficiency aggregation.
- Explore indicators of a material weakness and examine risk factors for considering the severity of a deficiency through utilization of relevant examples.
- Examine requirements for deficiency communication.
- Explore the history of disclosed deficiencies and financial re-statement study.
- Explore PCAOB current priorities and released updates.
Last updated/reviewed: March 5, 2024
Included In Certifications
This course is included in the following Certification Programs:
16 CoursesSarbanes-Oxley (SOX) Certification
- Sarbanes Oxley Overview
- SOX: Authoritative Bodies
- Sarbanes-Oxley (SOX) Standards - Evolution
- Information Technology General Controls Primer
- COSO 2013 Overview
- Sarbanes-Oxley (SOX) Section 404
- Sarbanes-Oxley Section 302: ICFR
- Sarbanes-Oxley (SOX) And Fraud Sections
- Sarbanes-Oxley (SOX) - Top Down Risk Assessment Part 1
- Sarbanes-Oxley (SOX) - Top Down Risk Assessment Part 2
- Sarbanes-Oxley (SOX) - Entity Level Controls
- Sarbanes-Oxley (SOX) Identifying and Documenting Controls
- Sarbanes-Oxley (SOX) Testing
- Sarbanes-Oxley (SOX) - Assessing Data Impact
- XBRL - Connection to SOX 302/404 and Critical Roles
- Tools For Sarbanes-Oxley Compliance
136 Reviews (595 ratings)
Reviews
Anonymous
(Consultant)
nternal controls over financial reporting (ICFR) are processes designed to ensure the accuracy, reliability, and timeliness of financial information. They help organizations prevent or detect errors and fraud, and provide reasonable assurance that financial statements are prepared in accordance with applicable accounting principles and regulations, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).
Cory Goodman
(Internal Auditor - Finance at Republic Finance)
Course content was presented clearly. Slides contributed meaningfully to understanding of the information. Instructor was knowledgeable about the material and provided insight. The only issue I had was that some of the slides were truncated or words were unintelligibly misspelled. This is also true of other Sections within the SOX Certification but this is the first time I spoke about it.
Maurine Dyer
(Sole Proprietor at MDyer Information Management)
This course gave a good understanding of how to assess materiality impact. It was useful to me and I especially liked the inclusion of good examples and how to think around them in coming up with an assessment. I found the final exam a bit challenging and that was good because it caused me to go back into the material and pay more attention.
Anonymous
(Director)
This is a good course. It provides a lot of helpful information. The examples provided are hrlpful for the better understanding of the topics. The time allotted is about right and the materials used are good. The instructor displayed that she is very knowledgable of the topics discussed all throughout the session.
Anonymous
(CPA)
Engaging course focusing on management's and the auditors' responsibilities for detecting, evaluating and reporting various types of deficiencies in the internal control environment, with lots of real world examples of how this occurs in relation to different types of deficiencies affecting ICFR.
Anonymous
(Sr. Director of Cost Management and Comp..)
Comprehensive overview of SOX discussion of determination of internal control deficiencies and classification as to significant or material weakness. Use of several examples helped drive home the often times subjective nature of these determinations and critical factors to evaluate.
Brenda Dugan
(Financial Controls Compliance Manager at United Community Bank)
Assessing the components of findings to determine the relevant deficiency classification was challenging. However, Lynn emphasizes the subjectivity of performing the latter and importance of reading PCAOB updates. Overall, well designed course. Worth revisiting on an annual basis!
DAvid Beauregard
(Managing Director at Monument Square Advisors)
The course was interesting, took much longer to learn material than suggested by course developers and some inconsistencies exist in the language of SOX and the real-world outcomes that are not addressed by the course. Overall a real exercise in "logic". DRB
Neal Stiles
(Accounting & Finance Guy at Contractor)
The instructor provides great clarity to the topic of assessing material impact. The course would be insightful to a beginning and a solid refresher to an experienced accountant. The examples provided were spot on and topical. A good course overall.
Anonymous
(CFO)
Good review of the nuances associated with the various AS5 in ICFR terms and definitions. Also does a good job laying our the roles of different parties in the IC landscape. Does not go into detail on any quantitative measures of assessment.
Steven Manocchio
(Senior Director at Cisco Systems Inc.- FCRM)
The course provided an informational oversight as to the ICFR control environment and the relevant regulatory bodies that support the effective oversight of methodology and standards required to be followed by external auditors.
Waqar Ali Shah
( at LRH)
Excellent course on the impact evaluation of a material misstatement. Provide some practical examples of real world situations. The course is also helpful for understanding how PCAOB considers a deficiency as material weakness
Anonymous
(Internal Control Expert)
It was very well structured, well-paced and easy to follow training course. Structuring the course in segments as well as offering a continuous play option is perfect for any learning style. The examples given were good.
Anonymous
(Executive Director, Corporate Controller)
This course is comprehensive and yet high level enough to help one to understand the objectives of SOX. The examples in the course are also helpful to address the levels of severity of internal control issues.
Anonymous
(Director, Financial Shared Services)
This course is a very thorough review of assessing material impact for Sarbanes-Oxley and contains relevant information for those new to the assessment process or looking for a deeper dive. Good case studies.
Anonymous
()
This course provided multiple examples of identifying between material weaknesses and significant deficiencies as well as real life examples of Company MWs, which brought the made the material more interesting
Anonymous
(NA)
good.******************************************************************************************************************************************************************************************************
Anonymous
(Internal Auditor)
Great thorough overview of evaluating deficiencies. Good course with a lot of useful information. Examples really helped to understand difference between material weakness and significant deficiency
Robert Werner
(CAO at Invitae)
Great refresher course! I was a little rusty on SOX and was able to get up to speed quickly. Very valuable as we are consistently assessing SOX implications for base business and acquisitions.
Anonymous
(Director of FInance)
This course was very informative and detailed around the impact of Sarbanes-Oxley on the operations of organizations. The presenter made the context easy to follow despite the technical details.
David DePalma
(Internal Auditor at Travel & Leisure Co.)
Really good course covering the the various deficiencies types. The examples provided were recent and relevant. Interesting how you can have a material weakness, but not even have a misstatement!
Anonymous
(-)
Another great course from Lynn Fountain with regard to internal control. Full of guidance as well as real world situations. Feedback from PCAOB study was an excellent wrap up to this course.
Anonymous
(Lead IT Auditor)
This was a helpful discussion about the difficulties in how to classify deficiencies as significant and whether they aggregate to a material weakness. I found the actual examples helpful.
Anonymous
(NFR Specialist III)
This course is a very good material for beginners, but also experienced professionals. It is clearly and accessibly structured with key points brought to attention of the students.
This was a longer slide show but it provided in-depth coverage of the importance of how to think about internal control deficiencies and how to determine if they may be material.
Anonymous
(None)
Good course that provided interesting examples to help both illustrate the differences been a MW & SD and provide further insight into specific cases of organizations' recent MWs.
Anonymous
()
Easy to understand and well organized. Each slide had just the right amount of information. I was able to gather a lot of useful reminders without getting lost in technicalities.
Anonymous
(Accounting Manager)
This course was great at explaining why the determination of materiality is not always easy. The real-life examples were great and were a great addition to the presentation.
Daniel Paul
(Director at CNM LLP)
Thought this was excellent - would have liked to have seen a little bit more of practical ways to assess SD v MW from end-to-end. Really break down the process and steps.
Anonymous
(SVP Accounting and Internal Control)
A helpful, tangible approach on the topic. Judgment and specific company factors play into a conclusion/position. The information within this webinar will be useful.
Anonymous
(Manager SOX & Accounting)
This course included more examples of applying the concepts than prior courses which is very helpful. Course provides concepts that I really did not think about.
Anonymous
(SOX process manager)
Great thorough overview of evaluating deficiencies - I really appreciated how Lynn used multiple examples to help one gain a better understanding on this area.
Sou-Der Su
(Consultant at DLC Group)
This session is well organized and gives a thorough review of auditors' and management's responsibility and recent trends in assessment and reporting of ICFR.
Anonymous
(Director)
I did not like the wording of the final exam... too many questions with "not" that don't really get to the heart of the matter. Otherwise, content is good.
Sylvia Ratliff
(internal audit consultant at self employed)
Halfway through the course, the volume reduced and i had to lean close to my speakers to understand, although I had both the PC and speaker volume at max.
Anonymous
(Associate Director)
Overall the course was a great overview of evaluating deficiencies. The instructor provides great detail on how to distinguish between a SD and a MW.
Michael Rogers
(Internal Auditor at Assurant)
Background of the ins and outs of audit findings is helpful for understanding deeper what is being discussed and determined with our external auditors
Anonymous
(Accountant)
This section gave me much to think about: aggregation, compensating and cross function controls have taken on new meaning. I will likely revisit it.
Jennifer Pawliw
(Staff Auditor 1 at Berkshire Bank)
Good course with a lot of useful information. Examples really helped understand difference between material weakness and significant deficiency
Abu Shaikh Siddique
(Senior Internal Auditor at Nokia)
Sarbanes-Oxley (SOX) - Assessing Material Impact course provide a meaningful information to understand and to assess material material impact.
Anonymous
(Controls Specialist)
The final module in this marathon of a course - 17 courses yet it was very well delivered and comprehensive. Job well done as I learnt a lot.
Hussain Bin Saad
(Senior Auditor at Saudi Aramco)
Course was clear and well organized. There were clear examples provided, both real and made up scenarios to clarify the ideas in the course.
Anonymous
()
Excellent course for beginners to understand SOX. There are many examples included which helps your further understand the relevance of SOX.
Thomas Hayes
(Clinical Associate Professor at University of Arkansas)
I like the way Lynn organized the course. It surprised how much I still have to learn about SOX. Anyone teaching auditing would benefit.
Anonymous
(Senior Internal Auditor)
Slides contributed meaningfully to understanding of the information. Instructor was knowledgeable about the material and provided insight.
Anonymous
(Audit Manager)
In doing this course, i was able to relate back to how we handle deficiencies (and see that we were operating at the PCOAB prescribes)
Multimer Cayabyab
(Sr. Analyst at LCL)
Good discussion on SOX material impact, as it gives you information on what are the topics that are involved in the subject matter.
Will Nystrom
( at BMC Investments/BLDG Management)
Great course. The instructor did a great job giving a good overall knowledge of material weaknesses from SOX. Great job teaching!
Anonymous
(Analyst)
I liked the summary of trends in deficiency history and restatement study. It helps to know where to potentially focus efforts.
Anonymous
(Specialist SOX Compliance)
This was a good training to show how difficult it is to correctly understand the severity of a deficiency. Examples are good.
Anonymous
()
Very good information, glad I took this course. Engaging instructor and relevant slides, will keep information for later use.
Kevin Murray
(Business Partner - Strategic Projects at The Wesson Group)
A good outline to determine the severity of control failures. There were good real life examples of failures illustrated.
Jon McGinnis
(Internal Audit Director at One Call)
The varying definitions were helpful as well as the examples in helping to clarify an often challenging task for auditors.
Anonymous
(Manager Internal Audit)
The course was beneficial to learning about control deficiencies and how to properly assess them for a material weakness.
Anonymous
(Consultant)
Really enjoy this instructor's courses related to SOX. She seems really knowledgeable and provides practical examples.
Anonymous
(Internal Control Manager)
I liked the examples provided for SD and MW very much. Those were very helpful to understand the evaluation technics.
Anonymous
(IT Advisory Snr. Associate)
This is a refreshing and detailed course on assessing material impact related to SOX. Nothing surprised me though.
Anonymous
(Consultant)
Very informative course on material weaknesses and significant deficiencies and the differences between the two.
Anonymous
(Audit Director)
A good course. Brought all of the previous learnings together and the examples of MW and SD were very helpful.
Debra Lindquist
(controller at SafeRide Health)
Great course! The information is presented in a manner that is easy to understand. Examples are very helpful.
Derek Ettinger
( at GP Fund Solutions, LLC)
Very good overview of SOX. The instructor provided some great examples to help illustrate the concepts covered.
Mariem Issler
(Director Internal Control, Processes and.. at Thales)
This course provides clear example of material weaknesses and severe deficiencies as well as clear definitions.
ERIC ABAIDOO
( at Tullow Oil)
I enjoyed the course.I also struggled with the questions.
Overall it was an excellent delivery again by Lynn.
Anonymous
(Senior Auditor)
This course brings clarity to a tough subject and helps seasoned accountants build on their knowledge base.
Anonymous
(Internal Auditor)
Good course. The course met my expectations. Since it was online, it was convenient to complete the modules.
Anonymous
(Internal controls manager)
I liked very much the examples that were introduced by the trainer as it gave more insight to the topic.
Joseph Tregellas
( at TriNet)
A good review of Internal Audit, deficiencies and the discussions around them in today's audit structure.
Paul Hong
(Supervisor at RSM)
This training helped to solidify concepts that I have dealt with before but did not fully conceptualize.
Mandy Wong
(Consultant at DLC Group)
Overall great webinar. It would be helpful to reduce the number of abbreviations in the slides though.
Anonymous
(Reinsurance Accounting Manager)
Excellent course explaining more in depth how to assess the materiality of deficiencies identified.
Johanna Gierl
(SOX at Cisco)
Very important reminders and technical guidance on what to do when evaluating control deficiencies.
Anonymous
(Consultant)
Good real world examples of how to handle different levels of deficiencies and material weaknesses.
Anonymous
(Assurance Specialist)
Well structured review that includes several examples that illustrate the topics under discussion.
Anonymous
(Controller)
This was a great refresher on what the best way to articulate the differences between a SD and MW.
Joy Franklin
(Auditor at Assurant)
This course was very informative and gave a good comparison to identify between an SD and a MW.
Sam Grosoff
(Associate at RSM)
I beleive I learned a lot from this course and I am thankful I took the time to learn about it.
Anonymous
()
I found the course helpful and the material easy to follow along with. Overall a good course.
Anonymous
(CPA)
This course was excellent and provided important information that I will utilize in the future.
Anonymous
(Manager, Risk Advisory and Assurance Ser..)
This course provides a good foundation for understanding AS5 definitions of material weakness
Lilian Dendrinos
(consultant at DLC Group)
Yet another great course. I've taken all of Lynn's SOX classes and they have all been great.
Anonymous
(Treasury Manager)
To me this have been the most challenging course and a great tool to keep complying with SOX.
Anonymous
(IT Risk Manager)
Dislike: The writing of the exam questions aren't as well written as the rest of the courses.
Shreeya Srivastava
(IS/IT Internal Auditor at Nokia)
Very nice course and designed well to provide adequate learning opportunities for auditors.
Anonymous
(Contractor)
thanks again for such detailed review of MS and SD. Trainer's examples were very useful.
Anonymous
(Manager - Compliance and Risk Management)
This course was solid. I enjoyed the definitions and examples in the course material.
Anonymous
()
Very interesting class. Really appreciated the examples to assist in my understanding
Anonymous
()
Believed course was presented well and met objectives. Good coverage of subject matter.
Anonymous
(Controller)
This another excellent course from an amazing instructor. You won't be disappointed.
Anonymous
(Manager - BP SOX)
Information related to restatements and PCAOB findings was up to date and relevant.
Anonymous
(Director of Accounting)
Another great course to gain an understanding internal controls guidance under SOX.
Anonymous
(N/A)
Great course with a lot of content. I found it very informative and comprehensive.
Anonymous
(Partner)
n/a...............................................................................
Robert Janicki
(Controller at Zumiez Inc.)
I appreciated the examples. These were helpful to explain SD and MW in practice.
Anonymous
(Accounts Associate)
The training videos was good and understandable. The PPT presented was clear .
Sharon King
(Contractor at Self employed)
This course was a great refresher on some of the challenges associated with SOX.
Kirit Kapadia
( at Kirit KapadiaCPA)
Describing significant recents developments in material weakness and deficiancy
FABIO PASTENA
(internal controls leader at ge)
Excellent review of deficiency impacts and logic from the PCAOB, SEC and AICPA.
Anonymous
(SOX Reporting Manager)
Great topic and supporting detail to explain in a straight-forward easy manner
Mirwais Nazar Mohammad
(Senior Manager Finance at Ivanhoe Electric Corp.)
Very extensive amount of information is explained in a very thorough manner.
Anonymous
(Internal Audit Manager)
Clear and concise introduction or refresher to control deficiency concepts.
Anonymous
(Senior Internal Auditor)
The examples in this module were very useful to get a better understanding.
Karen Hemminger
(Consultant at Arizona Public Service Company)
It is a very good overview of Audit requirements, SOX and Material Impacts
Anonymous
(Manager)
organized and detailed information.
organized and detailed information.
Anonymous
(Manager)
Great course for current SOX relevancy and its impact on an organization.
Sarah Nikas
(Finance Controls and Compliance Lead at Cargill)
Good information, easy to understand. Overall enjoyed the whole course.
Anonymous
(Supervisor, Technology Risk Consulting)
this course was great and helped better my understanding of the subject
Tanay Srivastava
(Sr IT/IS Auditior at Nokia)
Very good course, Its good to have a one presentation rather than many
Eduardo Sola
(Finance Director at Clear Blue Insurance Group)
Great course very helpful to understand how to assess deficiencies
Anonymous
(Director - Billing Data Integrity)
I really enjoyed this class but it was more of refresher for me.
Anonymous
()
Thanks Lynn, I am quite satisfied with the info. You are the best.
Anonymous
(Senior IT Auditor)
This course was insightful and provided a vast amount of knowledge
Anonymous
(Business Compliance Manager)
Objectives met, Requirements appropriate, Materials are relevant
Paulo Sitoe
(Internal Auditor at Nokia)
Great recap about Material Weakness and Deficiency aggregation.
Alyssa Borenstein
(n/a at Casper)
awesome course, great insight into SOX and material weaknesses
Daiane Cavalcante
(Jr Manager Accountant at Hookipa Pharma Inc)
Course was very good and straightforward. Nothing else to add.
Anonymous
()
An update on the recent findings of the PCAOB would be useful.
Anonymous
()
More interesting, relative, and informative than other courses
Scott Anderton
(CFO at HCA)
Appreciated the examples to work through different scenarios
Anonymous
(GL Manager)
Good course explaining on SOX and assessing material impact.
Inna Shmukler
(Controller at Fornetix LLC)
Very informative course. Liked all the examples and cases.
Anonymous
(Consultant - Process Specialist)
The illustrations were easy to understand and very useful.
Anonymous
(Staff Operations Auditor)
This was a great course with a lot of useful information.
Anonymous
(Auditor)
Great review of SOX materiality concepts and definitions.
Sudhanshu Mewara
(Manager at KNAV PA)
I have completed the course and have no further comments.
Anonymous
(Senior Revenue Manager)
I enjoyed this course, and I found it very informative.
Youlanda Williams
(Program Analyst at VA - U.S. Department of Veterans Affairs)
Very helpful information, excellently presented course!
Brandon Devlin
( at ATS Automation)
Informative - not much to comment on this course at all
Anonymous
()
I'm not an auditor but this was a great overview of Sox
Vinicius Bravo Ferreira
(Senior Manager at World Fuel Services)
Good content and covers the main topics related to SOX
Anonymous
()
This was a helpful course and the slides were useful.
Christopher Hole
(Director of Internal Audit at Roseburg Forest Products)
Nice overview of assessing severity of deficiencies.
Jim Rodda
( at Rodda Solutions)
good course for a refresher on Material weaknesses.
Anonymous
(internal auditor)
love this author. smart content. smart questions
Anonymous
(SOX Senior Auditor)
A lot of very helpful information in this course.
Randy Maddox
(Internal Control Senior at Jack Cooper Transport)
The examples were very helpful.
Anonymous
(Internal Auditor)
Good
Prerequisites
Course Complexity: Intermediate
No Advanced Preparation or Prerequisites are needed for this course.
Education Provider Information
Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA
95113
Contact:
For more information regarding this course, including complaint and
cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to
.
Course Questions and Answers(2 Questions)
Lynn FountainCPA, CGMA, CRMA, MBA, cPIA, Consultant, Author, Trainer
About Illumeo
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Contact Us
- Email: info@illumeo.com
- Phone: 408-400-3993
- Adress: 1608 W Campbell
- Av #221, Campbell, CA 95008
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Where can I find the presentations for this course, please
Jacqueline: Presentation files are located under "Supporting Materials" for each course.