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Disclosure Initiative — Definition of Material (Amendments to IAS 1 and IAS 8) [Completed]

Effective date and transitional provisions:

The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted.

Last up­dated:

February 2019

Overview

The objective of this project was to refine the definition of materiality and clarify its characteristics (proposed clarifications). The proposed clarifications were originally discussed by the International Accounting Standards Board (IASB) during the development of the Principles of Disclosure Discussion Paper.

draft practice statement on materiality was published on October 28, 2015, however, subsequently it became clear that some of the proposed guidance needed to be authoritative to have the desired effect, so in December 2016, the project was split up into a part that would see a practice statement published and a part that was intended to result in amendments to IAS 1 and IAS 8. Both, the final practice statement and the exposure draft ED/2017/6 Definition of Material (Proposed amendments to IAS 1 and IAS 8) were published on September 14, 2017.

In October 2018, the IASB issued Definition of Material (Amendments to IAS 1 and IAS 8). The amendments clarify and align the definition of "material" and provide guidance to help improve consistency in the application of that concept whenever it is used in IFRS® Standards.

Three new aspects of the new definition should especially be noted:

  • Obscuring. The existing definition only focused on omitting or misstating information, however, the Board concluded that obscuring material information with information that can be omitted can have a similar effect. Although the term obscuring is new in the definition, it was already part of IAS 1 (IAS 1.30A).
  • Could reasonably be expected to influence. The existing definition referred to "could influence" which the Board felt might be understood as requiring too much information as almost anything "could" influence the decisions of some users even if the possibility is remote.
  • Primary users. The existing definition referred only to "users" which again the Board feared might be understood too broadly as requiring to consider all possible users of financial statements when deciding what information to disclose.

 

Other developments

February 2019

On February 1, 2019, the amendments to IAS 1 and IAS 8 relating to the Definition of Material were issued to Part I of the CPA Canada Handbook.

October 2018

On October 31, 2018, the IASB issued Definition of Material (Amendments to IAS 1 and IAS 8) to clarify the definition of "material" and to align the definition used in the Conceptual Framework and the standards themselves.

September 2018

On September 20, 2018, the IASB® staff updated the work plan to indicate that the Board plans to issue an IFRS amendment in November 2018.

June 2018

In June 2018, the staff of the IASB updated the work plan to indicate that the IASB expects to issue the final amendments in Q4/2018.

April 2018

In April 2018, the staff of the IASB updated the work plan to indicate that the IASB will decide the project direction in June 2018.

January 2018

On January 26, 2018, the IASB Staff updated this project to indicate that the IASB now expects to review the Exposure Draft Feedback in April 2018.

December 2017 

On December 18, 2017, the IASB staff updated the work plan to indicate that the IASB expects to review the Exposure Draft Feedback in March 2018. 

November 2017

On November 16, 2017, the IASB staff updated the work plan to indicate that the IASB expects to review the Exposure Draft Feedback in February 2018.

October 2017

On October 23, 2017, the AcSB issued an Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Stakeholders are encouraged to submit their comments by January 15, 2018.

September 2017

On September 22, 2017, the IASB staff updated the work plan to indicate that the IASB expects to review the Exposure Draft Feedback in Q1/2018.

On September 14, 2017, the IASB published an exposure draft Definition of Material (Proposed amendments to IAS 1 and IAS 8) to clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves. Comments are requested by January 15, 2018.

June 2017

In June 2017, the IASB staff updated the work plan to indicate that the IASB expects to issue an Exposure Draft for comment in September 2017.

March 2017

On March 23, 2017, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish an Exposure Draft for comment in June 2017.

 

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