What does overall materiality mean on the CPA exam?
Overall materiality. Materiality for the statements as a whole, set during planning. Performance materiality is set below it so that undetected errors cannot add up past it.
Defined against AU-C 320.10.
Which CPA exam sections use overall materiality?
Overall materiality appears in the AUD section of the CPA exam.
Other terms defined against AU-C 320
- material misstatement: An error or omission in the financial statements large enough, or of a kind, that it could change the decision of a reasonable user relying on them.
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.
- tolerable misstatement: A monetary amount set so that the risk of the actual misstatement in the population exceeding it is acceptably low.
- present fairly: The overall judgment behind an opinion: the statements as a whole give a true picture within the applicable framework, beyond mere technical compliance with each rule.