What does clearly trivial mean on the CPA exam?
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Clearly trivial. So small that it plainly does not matter, on its own or added to everything else. Misstatements below this threshold are not even accumulated for evaluation.
Defined against AU-C 450.05.
Worked example
An auditor sets overall materiality for a manufacturer at $600,000 and decides that misstatements under $20,000 are clearly trivial. Fieldwork turns up three findings: a $14,000 December freight invoice recorded in January, after the year end, a $55,000 overstatement of the warranty accrual, and 38 sales invoices posted twice by the same interface fault, each between $300 and $900 and $22,800 in total. A search of the full year finds no other duplicates.
Which of these findings does the auditor accumulate?
- The $55,000 warranty overstatement is above the $20,000 threshold, so it is accumulated.
- The $14,000 freight cutoff error is below the threshold and has no other error behind it, so it can be left out, provided the auditor has no doubt that it is trivial.
- The duplicated invoices are each tiny, but they share one cause and together exceed the threshold. Clearly trivial is judged on items taken individually and in the aggregate, so the $22,800 is accumulated as one misstatement.
Answer: The auditor accumulates the $55,000 warranty overstatement and the $22,800 of duplicated invoices, and leaves out only the $14,000 freight error.
The trap: Reading clearly trivial as another word for immaterial. All three findings are immaterial against $600,000, yet two of them must still be accumulated. The threshold sits an order of magnitude below materiality, and any doubt about whether an item is trivial means it is not.
Based on AU-C 450.05; AS 2810.20.
Which CPA exam sections use clearly trivial?
Clearly trivial appears in the AUD section of the CPA exam.
Related terms
- component materiality: Materiality set for one part of a group, below group materiality, so that undetected errors across several components cannot add up past the group threshold.