How does materiality work in group accounting?

Materiality is the threshold above which an omission or misstatement could influence the economic decisions of users of the group statements; below it, errors aren't worth correcting. Auditors set group (overall) materiality typically as a percentage of a benchmark — commonly ~5% of profit before tax, or ~0.5–1% of revenue or total assets for asset/revenue-heavy or loss-making groups — and derive performance materiality (a buffer below overall, often 50–75%) to reduce the risk that uncorrected and undetected misstatements aggregate above materiality. For a group audit they also set component materiality (lower than group) for individual entities. In the close, materiality is used to prioritize effort — focus on large accounts, large IC relationships, and high-risk estimates first — and to decide whether to push for an adjustment. It's both quantitative and qualitative: some items (fraud, related parties, covenant or bonus thresholds, regulatory minimums) are material by nature regardless of size.