Materiality has always been an elusive concept in IFRS. It is defined in a general sense, but, in the past, there has been little guidance to help preparers and others apply the concept. For this reason, the IASB decided it was important to issue a Practice Statement on materiality (in late 2015) as part of its disclosure initiative.

While a Practice Statement does not form an authoritative part of IFRS, it has been subject to due process, having received public exposure and input. It falls somewhere between educational guidance and implementation guidance as far as its authority is concerned.

Instructions

Read the Practice Statement on materiality and respond to the following questions:

(a) What was the reason for undertaking the project on materiality?

(b) How is materiality defined?

(c) What general guidance is provided on how to apply the materiality concept to financial reporting decisions?