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The IFRS Foundation has today published a summary of evidence gathered by national standards-setters on the effects of guidance on materiality judgements in IFRS Accounting Standards and other materials.

A company must judge whether information is material—that is information could be reasonably expected to influence an investor’s decisions—when determining recognition, measurement, presentation and disclosure in its financial statements. Judgements about materiality are essential to the application of IFRS Accounting Standards.

In 2017 and 2018 the IASB clarified its definition of material and published guidance and a series of case studies to make it easier for companies to make materiality judgements. The research national standard-setters carried out responds to the IASB’s April 2022 call for research to assess the effect of these initiatives on investors, companies, auditors and regulators.

The research showed there is a good understanding of the concept of materiality. Use of the guidance published in 2017 and 2018 varies across jurisdictions; where in use, the guidance has been found helpful. The research also suggested it would be beneficial to continue raising awareness among stakeholders about the guidance.

The IASB is actively considering how to provide further support to companies in applying materiality judgements in its projects, including in its Climate-related and Other Uncertainties in the Financial Statements project. The research will inform such discussions.

The national standard-setters taking part in the research initiative, working in partnership with academics from their jurisdictions, are from Australia, Botswana, China, Malaysia, Mexico and New Zealand.

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