SA 450 requires the auditor to accumulate every misstatement identified during the audit, other than those that are clearly trivial, on a running schedule, and to evaluate whether the overall audit strategy and plan need revision if the accumulated total approaches materiality. Near the end of the audit, each uncorrected misstatement is evaluated individually against performance materiality, and the aggregate of all uncorrected misstatements is evaluated against overall materiality — a combination small immaterial items can fail even when no single item would.
What has to go on the schedule
- Every misstatement identified during the audit, factual, judgmental or projected from a sample — not just the ones management agrees are errors
- Misstatements that are 'clearly trivial' can be excluded, but the threshold for clearly trivial has to be set well below performance materiality, and set deliberately, not assumed
- Projected misstatements from sample-based testing are included at the projected amount, not the amount actually found in the sample
- A misstatement corrected by management during the audit still gets documented — the schedule shows what was found and corrected, not only what remained uncorrected
The two required evaluations
| Evaluation | What it tests |
|---|---|
| Individual | Each uncorrected misstatement against performance materiality — is this one item, on its own, material? |
| Aggregate | The sum of all uncorrected misstatements against overall materiality — are the small items material once added together? |
A set of misstatements that individually fall well under performance materiality can still sum to a figure that breaches overall materiality — SA 450 requires the aggregate test specifically because the individual test alone would miss this.
What has to be communicated
- 01Request correctionAsk management to correct identified misstatements, including those arising from prior periods that still affect current-period figures.
- 02Communicate uncorrected misstatements to those charged with governanceIndividually and in aggregate, along with the effect they have, or could have, on the opinion — unless clearly trivial.
- 03Obtain or document reasons for non-correctionIf management declines to correct an identified misstatement, understand and document the reasons as part of evaluating the overall risk of further misstatement.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Audit workflow & automationSA 320: materiality in planning and performing an auditOverall materiality and performance materiality are not the same number with a safety margin added — they answer two different questions.
- Audit workflow & automationSA 700: forming an opinion, and what "true and fair" actually requires concluding onFinishing every planned procedure isn't the same as forming an opinion. SA 700 is the step that happens after the checklist, not instead of it.
- Audit documentationManaging audit queries and client responsesLogging outstanding requests with an owner and due date, escalating when documents don't arrive, and closing a query with evidence rather than just a tick.
- Audit workflow & automationSA 330: the auditor's responses to assessed risksA higher-risk item doesn't just need more testing. It needs more persuasive evidence — those are two different design decisions.
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