Materiality and your Financial Statements

The International Accounting Standards Board has issued a draft proposal to define materiality standards as it concerns the issuance of financial reports by entities. The proposed definition is that information is material if omitting it or misstating it could influence decisions that users make.

The important take away is that materiality now covers any information provided beyond and including the numbers that may influence a user in either a negative or positive way. This applies to financial statements for external users. Users are defined as people with reasonable knowledge of business and economic activities. Users can not be assumed to be financial experts. 

The important take away is that numbers are important but that disclosure must consider what level of detail be provided in those numbers and what level of supplemental information is material to the financial report.