Define materiality

You may need to consider material amounts for misstatements in the client file. Some online engagement products include a materiality document that can help you assess materiality as you work on the engagement. These documents are like forms where you can define thresholds for overall materiality, performance and trivial misstatements to keep track of benchmarks.

Complete the materiality form

Some engagement files have a Materiality document where you can record the determination of materiality for your engagement. You will most likely complete this form before doing any other testing or work for your client.

To complete the materiality form:

1. From the top menu, select Documents.

2. Select the Materiality document.

3. In the Principal Users of the Financial Statements section, enter the principal users and any factors to consider. You can select + Add row to add more principal users to the document.

   

4. In the Overall materiality section, enter one or more factors to determine materiality. You can add two basis types:

   1. Financial materiality basis - select a group from the trial balance and enter a benchmark percentage.

   2. Other basis - enter a custom basis description and amount, and enter a benchmark percentage.

   

5. In the Performance Materiality section, enter a benchmark percentage to be applied to overall planning materiality.

   

6. In the Trivial misstatement section, enter a maximum amount for trivial misstatements.

   

7. In the Materiality for circumstances section, enter one or more materiality factors for circumstances.

8. In the Performance materiality for specific circumstances section, enter one or more materiality factors for specific circumstances.

9. At the top of the Materiality document, select the Sign Off button and then sign off the Prepare role.

   

You have completed the materiality form. During the course of your engagement, you can review material groups and accounts in the trial balance.