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the materiality level is as follows :
1/2 – 1 % of Revenue
1 – 2% of Assets
5- 10% of Net Profit.When something is lets say 1.5 % of assets. will it be considered material or it is material when it crosses the above threshold ?
@kamlesh.jashnani1 said:
the materiality level is as follows :1/2 – 1 % of Revenue
1 – 2% of Assets
5- 10% of Net Profit.When something is lets say 1.5 % of assets. will it be considered material or it is material when it crosses the above threshold ?
Those figures are ranges. The auditor will set the planning materiality at a % within the range, so say 0.8% of revenue. The materiality will not be over a range but will be a defined point based on the auditors knowledge and experience of the client, the industry and the needs of the users. From there, performance materiality is set, which is at a lower value than the planning materiality to further reduce the detection risk.
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