Calculating materiality is one of the fundamental concepts in auditing. MyWorkpaper's materiality workpaper provides you with an automated, but highly flexible workpaper, ensuring that you are able to effectively apply your professional judgement whilst calculating materiality, but also retain the advantages of being an electronic system.
For the purpose of instructing you on how to use the B5 Materiality workpaper, we will break the completion of the workpaper into three distinct steps.
Before we begin with the specific details of the Materiality workpaper, please open B5.2 Materiality from the Working Paper Index.
Step 1 - Selecting the Benchmarks
Ensure you have imported the trial balance into the file;
Review the standard benchmarks provided (Total Assets) and if required add any additional benchmarks by selecting them from the dropdown menu;
Step 2 - Calculating Financial Statement Level Materiality
Next to the MATERIALITY field, click on the dropdown menu and select the appropriate materiality benchmark you would like to use;
- Enter an appropriate percentage (if change required) for the Overall Materiality, Performance Materiality and the Amount below which Misstatements are Clearly Trivial and the materiality figures will update automatically;
Step 3 - Calculating Specific Materiality
If required, you are able to calculate specific materiality for any other area of the audit by following the below procedures.
Underneath the overall materiality calculation, click on the Add Audit Area button;
- In the box provided, insert a description of the specific area and the type of materiality being calculated (i.e. overall materiality for the area or performance materiality) and manually input the levels of materiality;