Homepage

Members Login

Font: A A A

ESMA publishes a Consultation paper on ‘Considerations of materiality in financial reporting’

10/11/2011

Thursday, 10th November, 2011: The European Securities and Markets Authority (ESMA) has published a consultation paper, the purpose of which is 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 Authority’s Head of Financial Reporting Supervision, Michael Kavanagh, is Chair of the ESMA sub-group on materiality which produced the consultation paper.
 
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) is 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. The objective of financial statements is to provide information to a range of users for the purpose of economic decision making. To be useful, such statements must present fairly the financial position, performance and cash flows of the reporting entity. Where information which is required by the relevant financial reporting framework is omitted or misstated and such information could influence the economic decision-making of a user, financial statements cannot be said to achieve a fair presentation. The concept of ‘materiality’ is used to describe such information.
 
News RSS