Answer
ISA 320 addresses materiality in planning and performing an audit. It requires setting materiality for the financial statements as a whole, performance materiality (lower, to reduce aggregation risk), and revising these as the audit progresses. Materiality guides the nature, timing, and extent of procedures and the evaluation of misstatements.
Real-world example The team sets overall materiality at 1% of revenue and performance materiality at 75% of that under ISA 320.