ACCA Audit and Assurance (F8) Practice Exam

The benchmark percentage commonly used for assessing materiality related to gross profit is typically in the range of 2% to 5%. This range reflects a standard approach auditors use when determining materiality thresholds for financial statement audits. Gross profit, being a key performance indicator for many businesses, serves as a relevant and significant figure for considering materiality.

Using a benchmark of 2% to 5% allows auditors to focus on amounts that could influence the economic decisions of users relying on the financial statement. By selecting a percentage within this range, auditors can establish a materiality threshold that reflects the performance and the underlying business risks associated with gross profit.

Other ranges, such as those below 2% or above 5%, may not adequately capture the significance of fluctuations in gross profit, thereby potentially leading to oversights in identifying material misstatements. Therefore, it's crucial to align with the commonly accepted range to ensure an effective audit process.