MaterialityMateriality

Materiality

1. The group engagement team shall determine the following: (Ref: Para. A42)
   1. Materiality for the group financial report as a whole when establishing the overall group audit strategy.
   2. If, in the specific circumstances of the group, there are particular classes of transactions, account balances or disclosures in the group financial report for which misstatements of lesser amounts than materiality for the group financial report as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the group financial report, the materiality level or levels to be applied to those particular classes of transactions, account balances or disclosures.
   3. Component materiality for those components where component auditors will perform an audit or a review for purposes of the group audit. To reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the group financial report exceeds materiality for the group financial report as a whole, component materiality shall be lower than materiality for the group financial report as a whole. (Ref: Para. A43‑A44)
   4. The threshold above which misstatements cannot be regarded as clearly trivial to the group financial report. (Ref: Para. A45)
2. Where component auditors will perform an audit for purposes of the group audit, the group engagement team shall evaluate the appropriateness of performance materiality determined at the component level. (Ref: Para. A46)
3. If a component is subject to audit by statute, regulation or other reason, and the group engagement team decides to use that audit to provide audit evidence for the group audit, the group engagement team shall determine whether:
   1. materiality for the component financial report as a whole; and
   2. performance materiality at the component level

meet the requirements of this Auditing Standard.