> For the complete documentation index, see [llms.txt](https://engyon.gitbook.io/engyon/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://engyon.gitbook.io/engyon/en/how-to-guides/materiality-and-scope/recording-materiality.md).
# Recording materiality
### **Related information**
This chapter contains detailed information about materiality. Basic information on this subject can be found on the following pages:
* [Training module 5: Ingesting figures, materiality and scoping](/engyon/en/training/training-english/module-5-importing-financial-data-scoping-and-materiality.md)
* [Knowledge base group audits: allocating materiality to components](/engyon/en/reference/group-audits/assign-materiality-to-components.md)
### Navigating to materiality
If a group audit is involved: Navigate the audit to the group level by clicking on the group icon (network, :network-wired:) and selecting the top Group entity.
You can find materiality by going to the `Procedures` menu, selecting the `materiality` section, and then opening the procedure step `Determining materiality, performance materiality and clearly trivial misstatements`. In the `context-specific data` on the left side, you can see the overall materiality and (if applicable) the specific materiality for financial statement line items.
You can also access materiality by going to `settings` and then `materiality` in the top right.
### Overall materiality
The overall materiality is the materiality for the financial statements as a whole, as mentioned in [Standard 320.10](https://www.nba.nl/wet--en-regelgeving/hra/1619/1645/2738/3398/). By clicking on `Calculation` under overall materiality, you open a menu that helps in determining materiality by following these steps.
1. Check the typology applicable to the client (there can be multiple); Engyon selects the potentially applicable benchmarks (such as revenues, gross margin, total expenses, normalized result etc.).
2. Select the basis for the benchmark (such as final financial statements, interim figures for the current financial year). This selection is not linked to the ingested figures.
3. Determine the impact of various aspects on the level of materiality. The position where you place the slider reflects the impact on the proposed materiality. Sliding to the left leads to a decrease in the percentage at step 4 and sliding to the right to an increase.
4. In step 4 'Benchmarks', select the applicable benchmarks, or adjust them where necessary, based on the pre-filled benchmarks resulting from the typology selected in step 1. Enter the applicable benchmark values (e.g. revenues, gross margin, etc.) for the selected benchmarks, in the 'value' column.
5. The proposed materiality per applicable benchmark is now displayed in the 'Calculated' column. Subsequently, the lowest materiality is chosen from the selected benchmarks.
The calculation and its substantiation are only saved if you click apply. Until that click, the input exists only in the browser. Included are the typology, the source of the figures, the sliders, the benchmarks, the amounts, the stability, and the explanation per benchmark. The amount under Value on the procedure step itself is saved immediately, even without apply. The explanation field above the calculation is not filled by apply; you fill that field yourself.
To round the calculated amount, click apply first. Then change the amount under Value. The calculation stays. Put the reason in explanation.
{% hint style="info" %}
The benchmark provides direction for determining materiality by taking various aspects into account. However, the professional judgement of the auditor always remains leading when determining materiality.
For example, a certain benchmark may be relatively high, an aspect may weigh more heavily than others, or an aspect may be applicable that is not included in the calculation, which may still lead to a proposed percentage that results in a materiality that is too high.
{% endhint %}
### Performance materiality
Performance materiality can be entered directly as an amount under value, or by entering a percentage under 'percentage' and then clicking the calculator button next to value. Subsequently, the value of the performance materiality is filled by multiplying the overall materiality by the performance materiality %.
By clicking on `Calculation` under performance materiality, you open a menu that helps in determining the performance materiality.
1. First, indicate whether the engagement is a first-year audit or not. If it is a first-year audit, the proposed performance materiality is set to 50% by default.
2. If it is not a first-year audit, determine the impact of various aspects on the level of the proposed performance materiality. The position where you place the slider reflects the impact on the performance materiality. Sliding to the left leads to an increase in the percentage and sliding to the right to a decrease. The proposed performance materiality is thus determined between 50% and 75%.
### Clearly trivial misstatements
The amount for 'clearly trivial misstatements' can be entered directly as an amount under value, or by entering a percentage under 'percentage' and then clicking the calculator button next to value. Subsequently, the value for 'clearly trivial misstatements' is filled by multiplying the overall materiality by the entered %.
By clicking on `Calculation` under 'clearly trivial misstatements', you open a menu that helps in determining the percentage. When 1 of the 3 aspects is decreasing (to the right), the proposed 'clearly trivial misstatements' remains at 5%; when 2 or more aspects are decreasing (to the right), this becomes 3%.
### Specific materiality
Within Engyon, you can assign a specific materiality to specific line items. To do this, add an extra materiality that applies to (a) specific line item(s). Click on materiality in the top right of the procedure step `Determining materiality, performance materiality and clearly trivial misstatements`, or via `settings` → `materiality` → materiality. Enter the figures here that apply to the selected line item(s). The methodology is the same as described above for the overall materiality.
### New materiality version
When you want to revise the materiality during the audit (Standard 320.13), but want to keep the original materiality (for example at the start of year-end procedures or upon completion of the audit), you can add a new version of the materiality. The original materiality, with its explanations, will then be kept as version 1.
To do this, open the procedure step `Determining materiality, performance materiality and clearly trivial misstatements` in the `materiality` section. Then click on New materiality version at the top of the procedure step. A copy is then made of the current version of the materiality and you can continue working in the new version.\
By going to `materiality` via `settings` in the top right, you can see the different materiality versions listed one below the other with Version 1, version 2, etc. All versions remain adjustable.
In the procedure step, you link the new version using link materiality version. The audit will then work with that version. Older versions remain visible via Settings → materiality. A materiality version is not deleted. The previous version remains, so that the revision is traceable.
During the interim, you can close the procedure step after the preliminary materiality has been recorded. Later, you add a version via Settings → materiality. You can then open the procedure step again.