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Disclosure Initiative - Definition of Material


Project History

On 14 September 2017, the IASB published Exposure Draft ED/2017/6 Definition of Material – Proposed Amendments to IAS 1 and IAS 8 ('the ED') with a comment period of 120 days.  The ED refines the definition of material to:

  • align the wording of the definitions in IAS 1, IAS 8 and the definition in the Conceptual Framework for Financial Reporting (the Conceptual Framework)—the wording is currently similar but not identical;
  • incorporate some of the existing supporting requirements in IAS 1 into the definition to give them additional prominence (including "obscuring information", "could reasonably be expected to influence") and
  • improve the clarity of the explanation accompanying the definition of material.

On 2 October 2017, EFRAG issued its draft comment letter where it supported the objective to remove the existing inconsistencies in the definition of "material" in the Conceptual Framework for Financial Reporting and in IFRS Standards. EFRAG also supported replacing the threshold 'could influence' with 'could reasonably be expected to influence'.

However, EFRAG suggested removing the references to 'omitting', 'misstating' and 'obscuring' from the definition of 'material' and defining material information more simply and directly as information that can reasonably be expected to, individually or collectively, influence the economic decisions that the primary users of financial statements make.

On 23 January 2018 EFRAG issued its final comment letter essentially reiterating the above views and a  Feedback Statement describing the main comments received and how these comments were considered by EFRAG in finalising its comment letter to the IASB.

On  31 October 2018, the IASB issued the Amendments which retained most of the proposals in the Exposure Draft.  

On 12 December 2018, EFRAG issued a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of the Amendments.

On 20 February 2019, EFRAG issued its final endorsement advice reiterating the assessment made in its draft endorsement advice letter, that the Amendments meet all the technical endorsement criteria of the IAS Regulation and are conducive to the European public good. EFRAG, therefore, recommended their endorsement.

On  10 December 2019, The European Union has published a Commission Regulation endorsing 'Definition of Material (Amendments to IAS 1 and IAS 8)'.the The European Union has published a Commission Regulation endorsing 'Definition of Material (Amendments to IAS 1 and IAS 8)'.​regulation adopting the Amendments was published in the Official Journal of the Europena Union.​.

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