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Materiality and performance materiality calculator.

How big can an error get before it would change what a reader decides?

Overall materiality, performance materiality and the clearly trivial threshold from the benchmark that fits the entity. Shows its working so you can put it in the planning memo.

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Entity and risk
Entity type
Engagement risk
Financial statement amounts
Overall materiality
$90,000
7.5% of pre-tax income
Performance materiality
$58,500
65% of overall
Clearly trivial
$4,500
5% of overall
Overall, performance, trivial
Overall materiality$90,000
Performance materiality$58,500
Clearly trivial$4,500
How this was worked out

Benchmark: Pre-tax income. Pre-tax income is at least 2% of revenue (the cutoff this tool uses to treat income as stable enough), so it is used as the base. Check that it is not distorted by one-off items.

BenchmarkAmountCommon rangeRange in $
Pre-tax income$1,200,0005% – 10%$60,000 – $120,000
Total revenue$25,000,0000.5% – 1%$125,000 – $250,000
Total assets$18,000,0000.5% – 1%$90,000 – $180,000
Total expenses$23,800,0000.5% – 2%$119,000 – $476,000

Ranges are common firm-methodology starting points, not AU-C requirements. AU-C 320 leaves the benchmark, percentage and performance materiality to the auditor's professional judgment. Document why you chose them, and revise materiality if the final figures differ materially from those used in planning.

Next, evaluate what you find with the summary of uncorrected misstatements evaluator, or size a test with the monetary unit sampling calculator. Materiality drives what goes in the file. See AU-C 230 audit documentation and the guide to audit working papers.

Common questions

What is performance materiality?

Performance materiality is an amount set below overall materiality to reduce, to an appropriately low level, the chance that uncorrected and undetected misstatements together exceed overall materiality. AU-C 320 defines it but does not fix a percentage; many firm methodologies use 50% to 75% of overall materiality, lower when risk is higher.

Which benchmark should I use for materiality?

Use the figure users of the financial statements focus on. For a steadily profitable company that is usually pre-tax income from continuing operations; for break-even or loss-making entities, revenue or total assets; for not-for-profits and governments, total expenses or revenue.

What is a clearly trivial threshold?

AU-C 450 has the auditor accumulate misstatements identified during the audit other than those that are clearly trivial. Firms commonly set the clearly trivial amount at around 3% to 5% of overall materiality; anything below it is not posted to the summary of misstatements.

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

Related audit calculators

CalculatorSummary of Uncorrected Misstatements Evaluator (AU-C 450)List factual, judgmental and projected misstatements and test them against materiality on both iron curtain and rollover.CalculatorMonetary Unit Sampling Calculator (MUS / PPS)Reliability factor, sampling interval and sample size, then the upper misstatement limit from the errors you find.
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