2. Materiality is a fundamental concept to risk based auditing. Discuss planning and performance materiality. Clearly describe how each level of materiality is applied. Describe how the benchmark is selected for determining materiality. If total revenue is $63,000,000 and total assets is $26,000,000 and a medium tolerance for misstatement was determined to be appropriate. Use the table below to determine overall planning materiality (tolerable misstatement), performance materiality is determined to be 75% of planning materiality and trivial is set at $2,000. User's tolerance for misstatements Section Medium Low to Medium Low High to High Medium Revenue 2% 1.75% 1.5% 1% 0.5% Profit Before Tax 10% 6% 5% 8% 7% 2% 1.75% 1.5% 1% 0.5% Total Assets Net Assets/Equity 10% 8% 7% 6% 5% 10% 8% 7% 6% 5% Net Current Assets