1. Planning Materiality. (Complete a. and b.

)
a. BASE AMOUNT (larger of total revenue or total assets or other benchmark)
Workpaper
Reference
Total Revenue (Annualize if interim amount is used) .. $ 7,762,460
Total Assets ...... $ 6,362,313
Other Benchmark (specify) (3)__________________________________________ $
b. PLANNING MATERIALITY CALCULATION
Percentage From
Table or Suitable
Amount Benchmark Planning
from Table (2) + ( Chosen Benchmark X Base Amount ) = Materiality
13,000 + ( 0.80% X 7,762,460 ) = 75,100
Round to the nearest 100 SAY 75,100
2. Tolerable Misstatement. Tolerable misstatement is used in computing sample sizes and in making other
scope decisions. As a rule of thumb, tolerable misstatement can be computed as follows: (1)
X Factor =
X 0.75 =
SAY
3. Individually Significant Items. The dollar amount used to identify individually significant dollar items can
be any amount up to tolerable misstatement. PPC's CX-8.1 provides guidance on determining individually significant items
for specific account balances or transaction classes.
ISI = 56,300 at 1/3 = 18,767 SAY 18,700
4 Lower Level of Planning Materiality for Particular Items. Identify any financial statement items (such as legal
or regulatory matters, related party transactions, management compensation, key industry disclosures, or
subsidiaries or divisions that are separately disclosed) for which a lower level of materiality should be used and
apply professional judgment to determine an appropriate planning materiality amount for those items.
X Factor =
X 0.75
X 0.75
X 0.75
5 Basis for Materiality Amounts (3). Describe the rationale on which the materiality levels calculated in 1-4 were
determined (for example, describe the reason for your selection of a benchmark and percentage).
6 Trivial Misstatements. Individual audit differences less than the following will not be carried to the proposed
adjustment schedule:
2,300
(1) If reliable estimates can be made of uncorrected known misstatement and likely misstatement, tolerable
misstatement may be computed as follows:
Planning
Materiality - (
Uncorrected Known
Misstatement +
Likely
Misstatement ) =
Tolerable
Misstatement
- ( + ) =
(2) Not applicable if table 1 is not used to calculate materiality
(3) If a financial statement element other than the larger of total assets or total revenue has been selected as a
benchmark, explain that choice. If the larger of total assets or total revenue has been selected as a benchmark
and another financial statement element (for example, pretax income from continuing operations) is a major
focus of user attention, explain why that major focus was not selected as a benchmark.
-
Tolerable
Misstatement
-
-
Financial Statement Item
Planning
Materiality
56,300
Calculations
Tolerable
75,100 56,325
Misstatement Amount from Line 1b
Planning Materiality