FIGURE 9-1 Steps in Applying materiality Set Step preliminary Planning extent of tests judgment about materiality Estimate Step total misstatement Allocate In segment Step preliminary Perform Dement about materiality tests Estimate to segments Step the combined misstatement Evaluating results Compare combine BS line items or cycles Step estimate with preliminary or Mat- TE or TM revised judgment Arens, Loebbecke; Auditing, 8/E about materiality @2000 Prentice hall.IncArens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. FIGURE 9 - 1 Steps in Applying Materiality Estimate total misstatement in segment Step 3 Estimate the combined misstatement Step 4 Compare combined estimate with preliminary or revised judgment about materiality Step 5 Set preliminary judgment about materiality Step 1 Allocate preliminary judgment about materiality to segments Step 2 Planning extent of tests Evaluating results BS line items or cycles Mat – TE or TM Perform tests