Deloitte Comment Letter on Materiality in Financial Reporting

Tuesday, March 27, 2012 Print Email

Deloitte's IFRS Global Office has submitted a letter of comment to the ESMA in response to its Consultation Paper, Considerations of materiality in financial reporting.

In the comment letter, we state that we believe the majority of preparers and auditors have a good understanding of materiality and that existing standards provide an appropriate framework for understanding and applying materiality:

Application of the concept of materiality necessarily involves the application of professional judgement. There are circumstances in which more than one valid conclusion can be reached based on the exercise of such judgement: we do not believe that this necessarily equates to a lack of consistency in the concept's application.

In the letter, we go on to express our concerns about non-global standard setters providing 'elaboration or interpretation' of existing accounting standards:

[W]e believe that the fundamental qualitative characteristics underpinning financial reporting, including the concept of materiality, need to be set by the globally-recognised independent standard-setters. . . . We believe that addressing these issues through accounting and auditing standards applied across many jurisdictions could contribute to global consistency in a way that guidance issued at a national or regional level could not.

Source: Deloitte

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