Preliminary materiality

This is covered in the notes and lectures: 0.5 to 1% of turnover etc then reduced to performance materiality.

Thank you for the reply. 000's Financial Statement Extracts 2014 2013 Revenue 21,960 19,580 Total assets 9,697 7,288 Profit before tax 1,048 248 Materiality A suitable range for preliminary materiality is $97,000 ­ $105,000. How did they find the range?

Hi It is also interesting for me.

Rev .05 - 1% = About 110,000 to 220,000 Total assets 1 - 2% = About 97,000 to 194,000 Profit 5 - 10% = 5,000 - 10,000 So a big range. Of course, you can have zero profit yet lots of revenue and high total assets. Setting the preliminary materiality at, say, 10,000 would probably mean too much testing. Looking at the other two, I'd probably go for 100,000. It's not an exact science!