Have you established dollar thresholds to determine your exception materiality and risk rating? For example, if you determined that the identified exception/finding could result in a $100k loss to the bank, then you would assign a moderate risk rating. If you have established such a system, how did you determine the thresholds? I am looking for examples of how to set the threshold.

I have done this but we established criticality levels not tied to dollar amount of a particular loan. For example, signed notes, recorded mortgages and UCCs were obviously critical or we had no collateral.

We did not tie it to a loan $ amount for one loan because risk can pile up if a number of loans in a portfolio do not have properly perfected collateral, the bank has a big issue.

We have established a dollar amount to use as a guideline. We chose 1/2 percent of Net Income after tax or $45,000.

That means that any exception/item I find during an audit (lets say a GL expense account) where the exception is greater than $45,000...IA researches the item. If the exception is less than $45,000 we would ask the department head to research the item and provide an explanation to the AC.

How are the dollar values determined? These would be "possible" losses and how are those reconciled to "probable" losses?