A new exposure draft from the International Public Sector Accounting Standards Board (IPSASB) details plans to offer more consistent guidance on materiality in three phases.
“Getting the definition of materiality right is critical because it affects what information is presented in public sector financial reports,” IPSASB Chair Ian Carruthers said in a news release. “The clear and consistent definition of material proposed in this ED will not only help entities with its application but will also provide a strong foundation for developing non-authoritative guidance on making materiality judgements in the second phase of this project.”
The ED’s proposals for improving the clarity and consistency of financial reporting include:
- Clarifying that an entity is required to consider the information needs of primary users instead of other users of the general-purpose financial report; and
- Aligning the definition of material in IPSAS 1, Presentation of Financial Statements, with Chapter 3: Qualitative Characteristics of the Conceptual Framework.
The first phase is review of the ED. The second phase, according to the release, includes developing nonauthoritative guidance aligned with IFRS Practice Statement 2, Making Materiality Judgments.
The third phase focuses on developing guidance on “making materiality judgments when preparing sustainability reporting” in accordance with IPSASB’s sustainability reporting standards (SRS). “This phase will commence following the development of IPSASB SRS ED 1, Climate-related Disclosures,” the release said.
The deadline for stakeholder comments on the draft is 14 July. Comments can be submitted online.
FRC unveils digital reporting insights; seeks stakeholder views on ISA for LCE
Insights from a discussion paper published by the UK Financial Reporting Council (FRC) address the next phase of digital reporting for UK companies and will inform ongoing developments and technical approaches to digital reporting across regulatory bodies.
The discussion paper reflects responses received from stakeholders “on how to shape the future of digital reporting in an EU-exit environment and in light of new legislation such as the Economic Crime and Corporate Transparency Act 2023,” a news release said.
Key findings from those discussions include support for ongoing collaboration between regulators and preparers to reduce complexity, calls for improved guidance and support materials, and a recognition of the balance needed between UK-specific reporting requirements and international comparability, the release said.
In another release, the FRC called for stakeholders to attend their upcoming webinar on 4 June to provide feedback on how the International Standard of Auditing for Less Complex Entities (ISA for LCE) can improve access to audit services for small- and medium-size entities.
Stakeholders can register for the webinar online.
Key takeaways from IFRS conference in Japan
The IFRS Foundation’s Integrated Thinking and Reporting Conference in Tokyo last month revealed enthusiasm for the IFRS Integrated Reporting Framework in Japan, with almost 1,200 companies adopting integrated reporting practices in the region.
The guidance is being used to encourage better human capital management and disclosures, and Japan’s regulators and investors found the framework helped drive better performance and capital allocation decisions, a news release said. The next phase of the International Sustainability Standards Board’s human capital research project will also involve in-depth engagement with stakeholders.
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