Tuesday 25 October 2016
The objective of this project is to help preparers, auditors and regulators to use judgement when applying the concept of materiality.
How the concept of materiality is applied in practice is seen by many as a major cause of the ‘disclosure problem’. Not making appropriate materiality judgements can result in both the disclosure of too much irrelevant (ie immaterial) information and not enough relevant (ie material) information.
As part of its Disclosure Initiative the IASB carried out research on what is meant by the term ‘materiality’. We looked at local accounting guidance, case law, regulatory and auditing guidance to help us understand how others have used or defined the concept of materiality. We spoke to preparers, investors, auditors, regulators and national standard-setters.
In November 2014, the IASB agreed that the IASB should make the definition of materiality and related material in IFRS consistent with the Conceptual Framework and across Standards. These proposals will be explored in the Principles of Disclosure Discussion Paper.
In October 2015 the IASB published on an Exposure Draft: IFRS Practice Statement Application of Materiality to Financial Statements to obtain feedback from parties with an interest in financial reporting.
The Materiality project was discussed at the July 2016 ASAF meeting
The Materiality project was discussed at the June 2016 joint CMAC and GPF meeting
The Materiality project was discussed at the April 2016 IASB meeting
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