ISA 320 · Construction

Materiality Calculator for Construction

Pre-configured for construction entities with considerations for IFRS 15 over-time revenue recognition, contract modifications, and work-in-progress valuation.

ISA 320 · LIVEv2026.04General

Materiality compiled,
not just calculated.

Session
0xC062
Fiscal Year
FY 2026
Benchmark
Profit Before Tax
inputs.conf
methodology.conf
README.md
01// entity— ISA 320.A4
02entity_name=
03fiscal_year_end=
04public_interest=
05first_year=
06industry=preset
suggested → PBT 5% is the standard starting point. Adjust for PIE/first-year.
09// benchmark— ISA 320.A4–A7
10benchmark.type=
11benchmark.amount=
12benchmark.percentage=
5.0%
range 5–10%
13benchmark.rationale=
14percentage.rationale=
Rationale fields · ISA 320.14 documentation
16// methodology— firm overrides
17performance_mat=
18trivial_threshold=
ISA 450.A2
19pm.rationale=
PM rationale · aggregation risk documentation
21// particular_materiality— ISA 320.10 · lower thresholds for sensitive areas
22Users expect full disclosure even of small amounts. ISA 550 significant risks apply.
23Regulatory sensitivity; users sensitive to disclosure precision.
24ISA 570 — qualitative by nature, lower threshold often appropriate.
25Misstatements that flip compliance status are material regardless of size.
26IFRS 8 — user decisions track segment performance.
27Industry-specific: bank capital ratios, insurance solvency, tax provision disclosure.
28Fair value estimates, R&D for pharma, loss reserves for insurance, NAV per share for funds.
Particular materiality checklist · ISA 320.10
30// normalisation— ISA 320.A6 · strip exceptional items
No adjustments. Add a line to exclude restructuring costs, impairments, or one-off gains.
Normalisation adjustments · one-off add-backs
40// prior_year_comparison— ISA 320.12 · year-on-year
41prior_year.amount=EUR
Prior-year comparison · YoY delta warnings
50// sensitivity— ±0.25 to ±2 percentage points
Enter a benchmark amount to see sensitivity analysis.
Sensitivity table · defensive range
60// component_materiality— ISA 600.21–23 · group audits
61group_audit=
Component materiality · ISA 600 group audits
70// revision_log— ISA 320.12–13 · changes during the audit
No revisions logged. Add an entry when new information changes materiality (e.g. actual results diverge from forecast, benchmark misstated, scope change).
Revision log · ISA 320.12 documentation
free tier·5/8 core fieldsEUR·no adj.
previewwp-mat-320-2026.pdf
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Overall materiality
—
Awaiting input
TOTAL
Performance mat.
—
75% · ISA 320.11
Clearly trivial
—
5% · ISA 450.A2
Tolerable misstmt.
—
Derived · 50% of perf.
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Pages
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Benchmark guidance

Construction and engineering companies recognise revenue over time under IFRS 15 using input or output methods to measure progress toward completion. This creates inherent estimation risk in both revenue and contract asset balances.

Choosing the right benchmark

Revenue at 0.5–1% is the standard range for construction entities. For large contractors with stable order books, the lower end is appropriate.

Key audit considerations

Revenue recognition over time under IFRS 15 — percentage of completion — is the primary area of estimation uncertainty.

Contract modifications, claims, and variation orders create additional measurement complexity.

Onerous contract provisions require assessment of estimated total contract costs against expected revenue.

Retention receivables and their recoverability may warrant specific attention.

Joint venture and consortium arrangements are common — IFRS 11 classification and related party implications should be considered.

Frequently asked questions

What benchmark should I use for construction audits?
Revenue at 0.5–1% is the standard range for construction entities. For large contractors with stable order books, the lower end is appropriate.
What are the key materiality considerations for construction?
Revenue recognition over time under IFRS 15 — percentage of completion — is the primary area of estimation uncertainty. Contract modifications, claims, and variation orders create additional measurement complexity. Onerous contract provisions require assessment of estimated total contract costs against expected revenue. Retention receivables and their recoverability may warrant specific attention. Joint venture and consortium arrangements are common — IFRS 11 classification and related party implications should be considered.
How does ISA 320 define materiality?
ISA 320 requires auditors to determine materiality for the financial statements as a whole when establishing the overall audit strategy. The benchmark chosen and the percentage applied depend on the nature of the entity, the needs of financial statement users, and the auditor's professional judgment.

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