HomeNewsBlogMaking materiality judgements – have your say on the proposed IPSASB guidance

Making materiality judgements – have your say on the proposed IPSASB guidance

The IPSASB issued a proposed Practice Statement on Making Materiality Judgements, locally issued as ED 220. The proposed Practice Statement includes non-mandatory guidance on applying materiality when preparing financial statements in accordance with IPSAS Accounting Standards.

The proposed Practice Statement is based on the IFRS® Practice Statement 2: Making Materiality Judgements issued by the IASB. The IPSASB adapted the IFRS guidance:

  • to align with the IPSAS Accounting Standards and the IPSASB’s Conceptual Framework;
  • so that the examples reflect public sector circumstances. Additional examples are also included to better reflect the application of materiality in the public sector; and
  • to remove guidance and examples on “potential” primary users, as the IPSASB Conceptual Framework only refers to “existing” users.

The proposed Practice Statement provides:

  • an overview of the general characteristics of materiality;
  • a four-step process that an entity may follow in making materiality judgments when preparing its financial statements; and
  • guidance on how to make materiality judgements in specific circumstances, for example, when considering prior period information or errors.

The ED includes an alternative view that the guidance is not sufficiently tailored for the public sector. In particular, it notes that the guidance does not fully reflect primary users’ decision-making and accountability needs, nor does it clearly explain how quantitative and qualitative factors interact. The alternative view also notes that the proposed Practice Statement does not deal in enough detail with public sector issues (for example, non-exchange transactions).

What are your views on the proposed Practice Statement (ED 220)? Share them by either attending a scheduled engagement (contact amandab@asb.co.za) or by submitting your comment directly to info@asb.co.za.  The comment period closes on 14 August 2026.

Disclaimer

The article has been prepared by the Secretariat of the ASB for information purposes only. It has not been reviewed, approved, or otherwise acted on by the Board.