Materiality for the Financial Statements

Free CPA AUD (Auditing & Attestation) lesson in Assessing Risk and Developing a Planned Response. 12 min read, ~1,762 words.

AU-C 320 sets materiality at the financial statements as a whole as the threshold above which misstatements would influence a reasonable user's economic decisions. Quantitative benchmarks: 5-10% of pretax income from continuing operations, 0.5-1% of total revenue or assets, ~1% of total equity, 0.5-1% of total expenditures for governments. Benchmark...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Key Takeaways
• Exam Shortcuts

Learning objectives

• II.D1

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