Thursday 18 December 2014
The objective of this project is to help preparers, auditors and regulators 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 has started a project to research what is meant by the term ‘materiality’. We will be looking at local accounting guidance, case law and regulatory and auditing guidance to help us understand how others have used or defined the concept of materiality.
The IASB staff will present the results of our research to an IASB meeting in Quarter 3 of 2014. That research will then assist the IASB in considering whether additional steps for materiality are required and, if so, what those next steps are. Next steps could include developing guidance or education material on materiality.
In addition, in Quarter 3 of 2014 the IASB staff will bring an initial paper to the IASB on how disclosures about significant accounting policies could be improved. Significant accounting policy disclosures are often identified as a home for boilerplate information and this topic is a working example of the application of materiality.
Materiality project discussed with ASAF
Materiality project discussed with CMAC
Materiality discussed with GPF
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