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The Materiality Practice Statement project was discussed at the December 2016 IASB meeting

 14 December 2016

Materiality Practice Statement

The Exposure Draft IFRS Practice Statement: Application of Materiality to Financial Statements (the draft Practice Statement) was published in October 2015 with a 120-day comment period. The objective of the draft Practice Statement was to assist management in applying the concept of materiality to general purpose financial statements prepared applying IFRS Standards.

Agenda Paper 11B: Prior period information

The Board discussed guidance on the application of materiality to prior period information provided in current period financial statements. The Board tentatively decided that the final Practice Statement should:

  1. avoid describing or acknowledging the existence of two different approaches to prior period information, being the ‘corresponding figures’ and ‘comparative financial statements’ approach. All 11 Board members agreed with this decision.
  2. state that the assessment of whether to provide narrative and descriptive prior period information should be made on the basis of its relevance to understanding the current period financial statements, in line with the requirements in IAS 1 Presentation of Financial Statements. All 11 Board members agreed with this decision.
  3. acknowledge that an entity might choose, or be required to include information in addition to the minimum prior period information required by IFRS Standards. The Standards do not prohibit the disclosure of additional information, but require that such information is prepared in accordance with the Standards and that it does not obscure information that is material according to those Standards. Seven Board members agreed and four disagreed with this decision.

Agenda Paper 11C: Due process steps followed

The Board reviewed the mandatory and non-mandatory due process steps taken in developing the Practice Statement. The Board also considered:

  1. the need for an Effects Analysis;
  2. the re-exposure criteria in The IASB and IFRS Interpretations Committee Due Process Handbook; and
  3. the Practice Statement effective date.

One Board member was absent. All 10 of the Board members present confirmed they are satisfied that the Board has completed all the due process steps required on the Materiality Practice Statement project and instructed the staff to begin the balloting process. At this time, none of the Board members present intends to dissent from issuance of the final Practice Statement on materiality.