Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 50

IFRS CORNER

DEC / JAN 2018

The PS contains non-mandatory guidance to help entities
making materiality judgements when preparing general
purpose IFRS financial statements. This guidance is intended
to respond to the concerns that financial statements do not
contain enough relevant information and, indeed, may include
irrelevant information, which have been identified by the
Board as two of the major sources of the so called 'disclosure
problem'. The PS may also help users of financial statements
to understand how an entity makes materiality judgements
in preparing
such financial statements.

LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE

N°99

In an attempt to enhance communication in financial reporting, the IASB has made Better Communication in Financial
Reporting a central theme of its agenda for 2017 to 2021.

- NOV /

On 14 September 2017, the International Accounting Standards Board (IASB or Board) issued IFRS Practice Statement 2:
Making Materiality Judgements (PS) and the Exposure Draft
(ED) Definition of Material. Both are the output of the Materiality Project which is part of the IASB's Disclosure Initiative.

The Practice Statement

The PS comprises guidance in three main areas:
* General characteristics of materiality
* A four-step process that may be applied in making materiality judgements when preparing financial statements (the
'materiality process')
* Guidance on how to make materiality judgements in specific
circumstances, namely, prior period information, errors and
covenants and in the context of interim reporting.
Furthermore, the PS discusses the interaction between the
materiality judgements an entity is required to make and
local laws and regulations. Local laws and regulations may
specify additional requirements that can affect the information included in the financial statements.

IFRS permits the disclosure of such additional information in
order to meet local legal or regulatory requirements, although
not material from an IFRS perspective, as long as it does not
obscure information that is material.
The PS includes some examples illustrating how an entity
might apply the guidance.

Exposure Draft Definition of Material
The Board proposes amendments to IAS 1 and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors in
a separate ED to clarify and align the definition of material.
The proposed amendments intend to improve the understanding of the existing requirements rather than to significantly impact an entity's materiality judgements or financial
statements.

Next steps
As the PS represents non-mandatory guidance, entities may
apply it immediately. The comment period for the ED Definition of Material ends on 15 January 2018.
In conclusion, we believe the PS provides guidance that
will be helpful when entities make materiality judgements
and thus may improve the communication effectiveness of
financial statements. Furthermore, it represents a useful
reference point for discussions between entities and their
auditors or regulators on the assessment of materiality.
Although the guidance in the PS is non mandatory, we
encourage entities to consider applying this guidance when
preparing their financial statements.
Renaud Breyer,
Executive Director,
EY Luxembourg
Lena Le Gal,
Senior Manager,
EY Luxembourg

Table des matières de la publication Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018