What is materiality

Here are some basics to help you refresh yourself with GPFR in Xero

It is part of the "conceptual framework".

Materiality is an entity specific aspect of the RELEVANCE of information.

Remember, relevance and faithful representation are the two fundamental qualitative characteristics.

The materiality principle applies to the preparation of the general purpose financial statements. 

Information is material if:

  1. Omitting
  2. Misstating or 
  3. Obscuring it

Could reasonably be expected to influence decisions that the primary users (of GPFR) make on the basis of those financial statements.

Information is obscured if it is communicated in a way that would have a similar effect to omitting or misstating that information.


Who cares?

Auditors.

Anyone that makes a decision based on the GPFR.

You, if your GPFR are intentionally misleading, you are being deceptive or committing fraud.