ESMA Consultation Paper on materiality

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10 Nov 2011

The European Securities and Markets Authority (ESMA) has published a consultation paper entitled Considerations of materiality in financial reporting.

The apparent differing views regarding the practical application of the concept of materiality amongst preparers, auditors, possibly users of the financial reports and, in some instances, accounting enforcers is a recurring theme of discussions at the European Enforcers Coordination Sessions (a forum in which all European National Enforcers of financial information meet to exchange views and discuss experiences of enforcement of IFRS). ESMA has therefore decided to publish a consultation paper in order to seek comments from interested parties on their understanding of various aspects of materiality in an effort to contribute to a consistent application of this important concept in financial reporting.

The consultation paper is structured around the chapters IFRS provisions, Characteristics of Primary Users and the Objective of Financial Reports, Attributes of the information, Errors, omissions and misstatements and aggregation, Note disclosures, and Interim reports - each with detailed analyses and questions. An annex to the paper (Annex II) provides a list of IFRS references to materiality and a list of selected references to users of financial statements in IFRS.

Responses to the consultation paper should be submitted by 29 February 2012.

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