Step 4: Determine Materiality Percentage Once the benchmark is identified, a percentage is applied to determine materiality. Here are general guidelines: - Profit Before Tax: 5% - Revenue: 1-5% - Total Assets: up to 1% - Net Assets: up to 3% - Expenses: 3-5% - Cash Flow from Operations: 3-5% Professional judgment is required to select the appropriate percentage for the chosen benchmark.

Step 4 Flashcards by Ishaq Jarwar

Step 4

Step 4: Determine Materiality Percentage

Once the benchmark is identified, a percentage is applied to determine materiality. Here are general guidelines:

Profit Before Tax: 5%
Revenue: 1-5%
Total Assets: up to 1%
Net Assets: up to 3%
Expenses: 3-5%
Cash Flow from Operations: 3-5%

Professional judgment is required to select the appropriate percentage for the chosen benchmark.

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Step 4 Flashcards

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