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Update to definition of ‘material’ in IFRS standards

The International Accounting Standards Board (IASB) has made amendments to the definition of material, the accounting concept which helps companies reporting under IFRS decide whether particular information should be included in their financial statements.

The updated definition amends IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Amendments have also been made to other IFRS standards and publications to ensure that the definition of material is consistent.

Old definition

Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements.
(IAS 1 Presentation of Financial Statements)

New definition

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.
(IAS 1 Presentation of Financial Statements)

Further explanation of new definition

The changes are effective from 1 January 2020, but early adoption is permitted.

If you require any further information on applying the new definition of material or any other aspects of international financial reporting standards, please contact Paul Merris.

authors:paul-merris