SA 320 mandates that materiality be set before fieldwork begins, documented with rationale, and locked. CORAA's three-step wizard guides the benchmark choice, PBT, Turnover, or Equity, applies the percentage, derives Performance Materiality and Clearly Trivial Threshold, and locks the memo. Out-of-band percentages require written rationale captured in the audit trail per SA 230.
Two paths to the same audit conclusion. One leaves traces; the other doesn't.
Three choices: Profit Before Tax (typical 3-10% for profit-making entities), Turnover (0.5% for loss-making, SME, or volatile-PBT entities), or Equity (1-2% for investor-led entities). CORAA renders all three benchmark values from the financials and recommends the lowest for listed entities.
A slider with the ICAI 3-10% band shaded. Selections inside the band require no rationale. Selections outside the band require a written justification before the wizard advances. Resulting Overall Materiality renders immediately.
Performance Materiality at 50-75% of OM (SA 320 A12), 75% default for low-risk engagements, 50% for higher-risk. Clearly Trivial Threshold at typically 5% of OM. Both rendered on sliders. Lock the memo when satisfied.
SA 320 suggests 3-10% of PBT as the typical band. CORAA's slider renders the band visually, selections inside don't trigger the rationale requirement; selections outside the band force a written justification.
Once locked, the materiality memo is read-only. Sampling, Findings classification, and Opinion sign-off all consume the locked numbers. Revision requires a documented re-evaluation note explaining what changed and why.
Performance Materiality (PM) is the buffer used for individual procedures, 50-75% of Overall Materiality per SA 320 A12. Clearly Trivial Threshold (CTT) is the de minimis floor, typically 5% of OM. CORAA derives both with explicit ratios and lets the auditor adjust within the band.
The memo and audit trail satisfy NFRA inspection and peer review requirements, benchmark choice documented, percentage band-justified, PM/CTT rationale captured, every revision time-stamped per SA 230.
