Definition of Material (IPSASB)
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We are seeking feedback on proposals from the International Public Sector Accounting Standards Board (IPSASB) to enhance the requirements and guidance on materiality in accounting standards. If these IPSASB proposals are introduced in New Zealand, they could help public benefit entities (PBEs) in Tier 1 and Tier 2 in making materiality judgements. |
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Background: The IPSASB's project on materiality
The IPSASB received feedback that public sector entities sometimes face difficulties in making materiality judgments when preparing general purposes financial reports. These difficulties can result in entities providing too much irrelevant information and/or not enough relevant information in their financial reports. The IPSASB commenced a project on materiality to address these difficulties.
The IPSASB’s project on materiality will have three phases, as shown below. The IPSASB is currently at Phase 1.
Proposals at a glance
As part of ‘Phase 1’ of the Materiality project, the IPSASB published Exposure Draft 93 Definition of Material. The Exposure Draft proposes the following, to help reporting entities in making materiality judgements when preparing financial statements:
- Clarify in the Conceptual Framework that decisions about materiality are intended to reflect the information needs of the primary users of general purpose financial reports – rather than all possible users;
- Align the definition of ‘material’ in IPSAS 1 Presentation of Financial Statements and other IPSAS with the description of materiality in the IPSASB Conceptual Framework – e.g. by adding a reference to not obscuring material information, updating the wording of the materiality threshold from ‘could influence’ to ‘could reasonably be expected to influence’, and reflecting the update above regarding ‘primary users’; and
- Add guidance on materiality into IPSAS 1, particularly with respect to not obscuring material information – aligned with guidance in standards issued by the International Accounting Standards Board.
We want to hear from you
We are interested in your feedback on the Exposure Draft proposals. In particular, we are interested in hearing your perspective about the potential benefits of these proposed changes, as well as whether there are any cost impacts or unintended consequences.
Your feedback will inform our submission to the IPSASB.
Please note: Once the IPSASB finalises the proposals in Exposure Draft 93, the XRB will consider whether to include these in PBE Standards in New Zealand. We will consult separately on this at a later stage.
Read the IPSASB’s ‘at a glance’ summary here
How to provide feedback
Please send us your comments — both formal and informal– by using the form below or emailing us at accounting@xrb.govt.nz
Comments must be submitted by 27 June 2025.
Comments can also be submitted directly to the IPSASB by 14 July 2025, by clicking here.
If submitting directly to the IPSASB, please send a copy of your submission to accounting@xrb.govt.nz
All submissions will be published on the XRB website unless confidentiality is requested. If you object to the release of any information in your submission, please identify the specific parts and the reasons under the Official Information Act 1982. We reserve the right not to publish defamatory submissions. Submissions are subject to the Official Information Act 1982 and the Privacy Act 2020. The XRB will handle personal information in accordance with these Acts.