The European Banking Federation provides its response to the ESMA Consultation Paper – Considerations of materiality in financial reporting.
EBF believes that the concept of materiality is clear, although EBF acknowledges there may be differences in practical application. It must be taken into account that materiality is applied at entity level and involves a degree of professional judgement taking into account not only entity specific factors but also various macro-economic aspects.
Different reporting outcomes could therefore be the result of application to different circumstances surrounding a specific item, and not necessarily a result of diverging understanding. The concept of materiality is an entity specific aspect of relevance and cannot be reduced to a set of prescriptive rules. If necessary, the principle behind materiality could be articulated more clearly to increase consistency in application and comparability at global level.
It is crucial to avoid excessive and irrelevant disclosures that could reduce readability and understandability of financial reports. Should there be a need for further clarification to enhance consistent application at global level, it should be provided by the IASB.
Full response
© EBF
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