26 February 2016

EBA comments on the IASB´s ED IFRS Practice Statement: Application of Materiality to Financial Statements

The EBA welcomed the IASB initiative to develop guidance in applying the concept of materiality to general purpose financial statements but calls for clarification of some of the proposals.

The EBA welcomes the IASB initiative to develop guidance in applying the concept of materiality to general purpose financial statements in order to discourage the exclusive use of a checklist approach and quantitative thresholds for the preparation of the disclosures in the financial statements and to provide more qualitative guidance on how materiality should be applied to the financial statements.

However, the EBA would encourage the IASB to explore further whether the application of the concept of materiality is appropriately explained in the IASBs existing mandatory documents and whether some of the material in this Practice Statement could be included in the Conceptual Framework and/ or IASB existing mandatory documents where relevant.

The EBA believes also that some of the proposals may merit being further clarified in order to ensure that they can be applied in practice by the preparers. In addition to that, other elements of the proposals could be further emphasised in order to ensure that the key aspects in applying the concept of materiality are covered sufficiently.

The EBA believes also that the Practice Statement should clarify its scope of application to ensure that it does not pre-empt or limit in any way the information that an entity would be required to disclose under any other regulation, such as the application of the concept of materiality for Pillar III disclosures.

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