27 March 2012

Deloitte commented on ESMA Considerations of Materiality in Financial Reporting

Deloitte acknowledges the initiative of ESMA in opening a discussion on this issue. The concept of materiality is critical to both the preparation and auditing of financial statements, and as such an understanding of it is necessary for those engaged in either activity. Deloitte believes that the majority of preparers and auditors have such an understanding. More significantly, Deloitte also believes that existing international accounting and auditing standards provide an appropriate framework for understanding and applying the concept of materiality.

Deloitte strongly supports the aim of a single set of high-quality financial reporting standards applied without regional variation. For this aim to be achieved, Deloitte believes that the fundamental qualitative characteristics underpinning financial reporting, including the concept of materiality, need to be set by the globally-recognised independent standard-setters. For this reason, Deloitte believes that any additional elaboration or interpretation of existing international accounting and auditing standards should be provided at a global level by the IASB and IAASB respectively under their established due process (including the consideration of input from securities market regulators and all other constituents). Deloitte believes that addressing these issues through accounting and auditing standards applied across many jurisdictions could contribute to global consistency in a way that guidance issued at a national or regional level could not.

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