Materiality Rule of Thumb

What It Stands For

5% of pretax income is a common materiality threshold

TopicAudit Materiality
Why It MattersWhile materiality is ultimately a matter of professional judgment (AU-C 320), common quantitative benchmarks include 5% of pretax income, 0.5-1% of total assets, or 0.5-1% of total revenue. These are starting points, not fixed rules.

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