Glossary›Assurance, audit evidence and working papers›Materiality threshold (quantitative)
Glossary term
Cluster A · A16
Tier 1 · differentiator
Materiality threshold (quantitative)
Definition
A materiality threshold is the size of misstatement above which a reader’s decisions would change. In climate assurance the assurance provider sets it for the engagement, usually as a percentage of total emissions, and it drives how much testing is done. It is separate from the entity’s own judgement about which climate risks are material enough to disclose.
On this page
In practice
Two different materiality concepts operate in the same report, and confusing them causes real problems.
The entity’s materiality judgement, under AASB S2, is about which climate-related risks and opportunities could reasonably be expected to affect the entity’s prospects, and therefore what must be disclosed. It is qualitative and quantitative, and it is a directors’ judgement.
The assurance provider’s materiality threshold is a number set for the engagement. It determines the size of misstatement that matters, and therefore how many items are tested and what gets investigated. The entity does not set it and is often not told the figure.
No percentage is prescribed. Practitioners typically anchor on total reported emissions for the emissions figures, and apply separate qualitative considerations to narrative disclosures, where a small omission can still be material.
What the assurer does with it
The assurer sets overall materiality at planning, often allocates a lower performance materiality to individual disclosures to leave room for undetected error, and uses it to scope testing. Findings below the threshold are accumulated rather than corrected individually, then assessed in aggregate at the end. The aggregation surprises entities: five separate errors each comfortably below materiality can together exceed it and force a correction late in the process.
Commonly confused with
Materiality under AASB S2. These are two separate concepts and two separate pages: the entity’s disclosure materiality judgement is not the assurer’s engagement threshold.
Sources
1
ASSA 5000 General Requirements for Sustainability Assurance Engagements
AUASB
2
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Registered company auditor
Next scheduled review
1 July 2027
Part of
Cluster A, Assurance, audit evidence and working papers
47 terms on what an assurance provider tests, what they accept as evidence, and what a preparer has to be able to produce.
Related terms
What the threshold is measured against
What the entity’s own materiality judgement decides to disclose
How materiality is applied to the value chain categories
Related questions
What is the materiality threshold for climate disclosures?
−
There is no prescribed number. Under AASB S2, information is material if omitting or misstating it could reasonably be expected to influence users’ decisions. Separately, your assurance practitioner sets a quantitative materiality for testing, and the two are related but different.
What happens if the assurance provider disagrees with our numbers?
+
Disagreement is normally resolved before it reaches the conclusion: the practitioner raises a query, you produce more evidence or adjust the number, and the file moves on. A modified conclusion only arrives if you decline to adjust something material, or if they cannot obtain the evidence they need. The second case is far more common in a first year and is entirely preventable through documentation.
Other terms in this cluster
Materiality threshold (quantitative)