The IASB's materiality paper The Application of Materiality to Financial Statements blows a breath of fresh air through financial reporting. By refocussing directors' and other preparers' attention on financial reporting as communication, the paper will help in getting rid of "clutter" - unnecessary disclosures that only serve to blur the message. In the words of the IASB: "The concept of materiality acts as a filter through which management sifts information to ensure that financial statements include all the financial information that could influence users' investment decisions. It also enables management to present material information in a clear and effective way, excluding information that is not material."
Westworth Kemp's submission is supportive of the IASB's initiative. In our view, clearer communication between organisations and stakeholders is essential and this paper, specifically addressed at management, rather than just accountants and auditors, will help. We would like to see the document given greater prominence in the accounting literature, perhaps as part of the Conceptual Framework, rather than a Practice Statement.
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