b'Independent auditors report to the membersof Mercia Asset Management PLC continued6.2 Performance materialityWe set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. Group performance materiality was set at 70% of Group materiality for the 2020 audit (2019: 70%). In determining performance materiality, we considered the following factors:a.the quality of the control environment and our ability to rely on internal controls, and b.the low number of corrected and uncorrected misstatements identified in the previous audit.6.3 Error reporting thresholdWe agreed with the Audit Committee that we would report to the Committee all audit differences in excess of 136,000 (2019: 115,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.7. An overview of the scope of our audit7.1 Identification and scoping of componentsOur Group audit scoping was determined by obtaining an understanding of the Group and its environment, including Group-wide controls, and assessing the risks of material misstatement at the Group level. Based on that assessment, our Group audit scope focused on all entities within the Group and covered all of the material balances in the consolidated statement of comprehensive income and consolidated balance sheet of theGroup. The audit of the Group and components were executed at levels of materiality applicable to each individual entity, which were lower than Group materiality and ranged from 1.0million to 1.6million (2019: 0.5million to 1.4million). These account for 99% of the Groups revenue and loss after taxation and 98% net assets. Each component of the audit was subject to full scope audit and an independent audit report is issued for each components statutory financial statements. The Group has several components, all of which are in the United Kingdom. Teams from our offices in Manchester and Birmingham have performed audit work. Furthermore, we also audited the consolidation schedule prepared at the Group level for accuracy and completeness.8. Other informationThe Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditors report thereon.Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.We have nothing to report in respect of these matters.9. Responsibilities of DirectorsAs explained more fully in the Statement of Directors Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the Directors are responsible for assessing the Groups and the parent Companys ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.10. Auditors responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.A further description of our responsibilities for the audit ofthe financial statements is located on the FRCs website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors report.72 Mercia Asset Management PLCAnnual Report and Accounts 2020'