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ISA 320: Materiality in planning and performing an audit

The auditing standard ISA 320 sets out the requirements for applying the concept of materiality in planning and performing audits of financial statements. Find articles, books and online resources providing quick links to the standard, guidance and recent developments.

Full standard

ISA (UK) 320 (Revised June 2016): Materiality in planning and performing an audit
As issued by the Financial Reporting Council (FRC) in June 2016.

The International Standards on Auditing (UK and Ireland) issued by the FRC are based on the International Standards on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) and published by the International Federation of Accountants (IFAC).

2018 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements
Latest edition of the handbook published by the IAASB.


The Library provides full text access to a selection of key business and reference eBooks from leading publishers. eBooks are available to logged-in ICAEW members, ACA students and other entitled users. If you are unable to access an eBook, please see our Help and support advice or contact library@icaew.com.

Audit and assurance essentials for professional accountancy exams
Katharine Bagshaw (Wiley, 2013)
This primer on the key concepts of professional auditing and assurance syllabuses has a short section on percentages and benchmarks which highlights some of the benchmarks in use and provides a worked example showing how materiality and performance materiality might be calculated.

Core auditing standards for practitioners
Katherine Bagshaw and John Selwood (Wiley, 2014)
This book contains a complete chapter on materiality which gives some of the benchmarks and percentages in use, along with further detailed examples.

Frequently asked questions in ISAs
Steven Collings (Wiley, 2014)
This book addresses key areas where audit firms are failing which have been flagged up by audit regulators. It includes a chapter on materiality, with worked examples, covering the calculation of financial statement materiality, qualitative and quantitative considerations, materiality considerations during the audit and documentation of materiality.

Articles and books in the Library collection

Selected books

Implementing GAAS 2015-16
Ian Connon and Helen MacNeil (Wolters Kluwer, 2016)
Implementing GAAS 2015-16 (Generally Accepted Auditing Standards) provides guidance on current UK auditing standards and the supporting Practice Notes, Bulletins and other material. The annually updated title contains examples, illustrations of recent reports and discussion of problem areas, including a chapter on materiality and the audit.

The audit process: Principles, practice and cases
Iain Gray and Stuart Manson (Cengage Learning, 2011)
An introduction to the principles and practice of auditing, with a chapter on sampling and materiality.

Emerging FRS 102 issues for auditors (Accountants Digest no. 611)
Katherine Bagshaw (Wolters Kluwer, 2015)
This digest focuses on the audit of financial statements prepared under FRS 102 with sections discussing how determining or using materiality has been affected by new UK GAAP.

Find more resources

To find out how you can borrow books from the Library please see our guide to book loans. You can obtain copies of articles or extracts of books and reports through our document supply service.

Further ICAEW support

Audit and assurance
Technical information, guidance and events on clarified ISAs, working in the regulated area of audit, the future of audit, gaining audit rights in the UK and the audit quality forum.

Audit and Assurance Faculty
The faculty gives members a comprehensive package of essential guidance and technical advice. It produces a monthly newsletter with the latest thinking, technical bulletins and regulatory updates, and member-only events.

Materiality in the audit of financial statements
Published jointly by ICAEW’s International Accounting, Auditing and Ethics (IAAE) and Audit and Assurance Faculty, this guide takes a practical look at the ISA requirements on materiality, highlighting the challenges and providing practical illustrations. Published in June 2017.

Group dynamics
Group audits can be challenging for group and component auditors. This article from Audit & Beyond, the magazine of the Audit and Assurance Faculty, offers some practical advice on how to avoid or overcome some of the more common problems. Published in June 2014.

Living in a material world
One of the more hotly debated areas of the clarified ISAs has been over the subject of materiality (ISA (UK&I) 320), including the newly named concept of performance materiality. For some firms, the outcome of the discussions only translates to relatively minor changes to what they do in practice. For others, it has meant greater change, including the opportunity to tackle audits more effectively. This article appeared in Audit & Beyond in November 2011.

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