International Accounting Standards Board (IASB) has issued an exposure draft (ED) proposing some amendments to be made to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2.


The ED proposes amendments in IAS 1 by amending the requirement for reporting entities to provide disclosure regarding their ‘significant’ accounting policies and instead they shall only provide disclosure of ‘material’ accounting policies.

That is to say, the proposed amendments requires reporting entity to identify and disclose all material accounting policies that are more useful to primary users of financial statements and eliminate all immaterial accounting policies from the financial statements.

Further, IASB through exposure draft has provided guidance on applying materiality by introducing two new examples that highlight the need to focus on information that is material and useful to users of financial statements and demonstrate how the application of the four-step materiality process can address the issues of providing generic information or repeating the requirements of IFRSs on disclosure of accounting policies.


Although the proposed amendments are considered to be consistent with the application of materiality to other financial information, Mr Martin Edelmann one of the board member, voted against the publication of this exposure draft on the grounds that, provision of accounting policies disclosure are made to assist users of financial statements in understanding how transactions, other events and conditions are reflected in the reported financial statements. Further he argued that, not all primary users of financial statements are accounting experts hence the disclosure of accounting policies could help them to better understand an entity’s reported financial performance and financial position even if such accounting policies are not important enough to be assessed as material because they would not be expected to influence the investment decisions of users.

Therefore, according to Mr Martin Edelmann, consideration of materiality in disclosing accounting policies might lead to a loss of important information and hence impede users’ understanding of the financial statements.


Comments on the proposed changes are to be received by 29 November 2019.

For details on the exposure draft, see IASB proposes amendments to IFRS Standards to improve accounting policy disclosures