EFRAG has published its draft comment letter in response to the Draft IFRS Practice Statement: Application of Materiality to Financial Statements and seeks constituents’ views on the proposals.
The IASB published the Exposure Draft ED/2015/8 IFRS Practice Statement: Application of Materiality to Financial Statements (the ‘draft Practice Statement’) on 28 October 2015, with comments due by 26 February 2016.
EFRAG has issued its draft comment letter on the draft Practice Statement where it supports the objective to provide non-mandatory application guidance on materiality. EFRAG considers that such guidance could be helpful, in particular in the context of disclosures, in order to provide a common ground for applying judgement in deciding which information is relevant for users and fostering thinking on how materiality is applied.
However, EFRAG considers that the objectives of the guidance should be clarified to state that the practice statement can be useful, beyond preparers, to promote a common understanding of the role and application of materiality by all those involved in the issue of financial statements.
EFRAG also considers that the guidance should be drafted in a more concise and practical way and focus on areas where it is most difficult to exercise judgement on the application of materiality; in particular how materiality is applied in line with the specific roles of the primary financial statements and of the notes.
Full press release
Draft comment letter
© EFRAG - European Financial Reporting Advisory Group
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