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IASB updates definition of ‘material’

The International Accounting Standards Board (IASB) has made amendments to its definition of what is considered material to make it easier for companies to make materiality judgements.

The amendments came as a response to findings that some companies have experienced difficulties using the old definition when judging whether information was material for inclusion in their financial statements.

The IASB said it found that while some stakeholders said substantive changes to the definition were unnecessary, some stakeholders were concerned that the previous definition might encourage entities to disclose immaterial information in their financial statements.

To address this, the IASB changed the definition surrounding information being material if omitting or misstating it ‘could influence’ to ‘could reasonably be expected to influence’.

The IASB has aligned the wording of the definition of material across IFRS Standards and other publications and has clarified the explanation accompanying the definition of material. IASB said it ‘expects the amendments will help entities make better materiality judgements without substantively changing existing requirements’.

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