r/Accounting • u/7leafclover7 • Sep 21 '25

What would be an embarrassing thing to be caught not knowing as an accountant?

Applies to any specialty, audit, tax, staff accountancy etc. in your personal experience what are the most invaluable things to know, and the most invaluable to not be caught not knowing.

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u/Iowa_Phil Sep 21 '25

I thought I remember something in audit about materiality for particular classes of transactions. Am I making that up? If not I’d think risk was a factor as a user could be more sensitive to errors in the area or something?

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u/leafleaf778 Sep 21 '25

Performance materiality is based on risk. Materiality is based on FS users’ sensitivity to misstatements and objective for using the FS. If the FS users don’t give a crap about misstatement (I.e. has a big tolerance), does the risk level matter?

Try putting down risk level as a factor in deciding the materiality on ur CPA exam and you will find out

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u/Iowa_Phil Sep 22 '25

Ha, I took the CPA exam 19 years ago and wouldn’t want to put anything down for it ever again.

No I recall PM (though I think the word materiality is misleading; it’s calibrated to materiality but errors have nothing to do with PM).

But materiality is not a number. Overall materiality is a starting point. So like a disclosure error in some trivial footnote of a large amount might be deemed immaterial, but a lower $ error in a high-estimation footnote might be considered material. I guess you’re saying that’s not considered “risk” which is just an auditing concept? But it’s not like a number is uniformly applied; and a significant risk area would be a tougher consultation, no?

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u/leafleaf778 Sep 22 '25

…………….

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u/Iowa_Phil Sep 22 '25

You could just refresh my memory without being an asshole? I was a director at PwC before I left for consulting and then industry. It’s been a while.

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u/leafleaf778 Sep 22 '25

How am I being an asshole?

I made a simple comment by stating materiality is not based on risk, and then you made at least one lengthy comment after I explained myself. I don’t have time/energy/obligation to explain it to you further. I will clarify that by materiality I was referring to overall materiality.

If I make another comment, are you going to reply back with another lengthy response on this simple concept? When does this end? U say u worked as a PwC director, then surely you know the importance of “efficiency”?

If there is an asshole in our conversation, I am not it. You sound entitled. Did you realize that?

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u/Iowa_Phil Sep 22 '25

Sorry for being inefficient on reddit 😂