ACCA SBR ^INT Syllabus B. The Financial Reporting Framework - Materiality - Notes ^{18 / 18}

There were concerns with the application of the concept of materiality

Leading to too much immaterial information - meaning the important information could get lost

So, this provides non-mandatory guidance to assist with the application of the concept of materiality

Characteristics of Materiality

Definition of Materiality 

"Information is material if omitting it or misstating it could influence decisions that the primary users of general purpose financial reports make on the basis of financial information about a specific reporting entity."

1. The IASB concedes that judgement is needed to see if info could reasonably be expected to influence decisions that its primary users make

2. To see if something is material involves assessing qualitative and quantitative factors

Presentation And Disclosure In The Financial Statements

Management should provide information that helps assess future cash & stewardship of resources. 

So different materiality assessments in different parts of the financial statements is possible 

Financial statements should not obscure material information with immaterial information although "IFRS does not prohibit entities from disclosing immaterial information".

The IASB proposes three steps:

1. Assess what information should be presented in the primary financial statements

2. Assess what information should be disclosed within the notes

3. Review the financial statements as a whole

   (to ensure that the financial statements are a comprehensive document with an appropriate overall mix and balance of information)