Materiality

What it checks

• Engagement identity: client, period, currency code and the scale the amounts are stated in. The header renders it; no worksheet holds its own copy.
• The currency label is composed, not typed: currency code + scale suffix — USD + thousands reads USD '000, millions reads USD m, units reads USD.
• Scale describes the data, it does not transform it. Restating a file in another scale is an ingestion decision, not a display toggle.
• Basis: the benchmark lines selected by the reviewer, summed signed then taken absolute.
• A benchmark line is a statement caption — Trade AR, Inventory, Cash & Bank — built from level 4 Account Group values, not one of those names.
• Overall materiality = basis × rate. The rate is the one figure entered by hand.
• Performance materiality = % of overall — default 50%.
• Tolerable error (TE) = % of performance materiality, capped at it — default 100%.
• Clearly trivial = % of overall — default 5%.
• Significant caption = TE × a stated multiple — default 10×, a house convention.
• Presets fill the checkboxes; they carry no rate, because which benchmark suits the entity and what percentage applies to it are two separate judgements.
• Validation gate: the workbook opens only once this page is signed off, and reopens the moment any input on it moves.

How the result is read

Materiality is a judgement, so the worksheet shows the judgement rather than the answer: which account groups make up the basis, what percentage was applied, and what each step down the ladder was set at. Signed summing is what makes the basis arguable — revenue plus every cost group is profit before tax, with no preset-specific arithmetic hidden behind the label. One rate is entered; the rest is derived, so a reviewer who disagrees moves one input and sees the whole ladder move with it. Rounding is down, not to nearest, because a threshold rounded up is a threshold that lets more through.

The worksheet, on the demo engagement

Materiality, as the application draws it for Harrow Precision Engineering Ltd, the fictional demo engagement — one row per rung of the materiality ladder.

In the application

Materiality is filed under Planning & analytics, index letter A. "Run all analyses" runs it with every other analysis the ledger can answer. The worksheet states the population it tested on its face — or "Not applicable" with the reason when a column it depends on is empty — and the Excel workbook the engagement exports files it under A, beside an index of the source files with their SHA-256 fingerprints.