Discussion on Materiality 2022

Running head: MATERIALITY
Materiality
Name of the Student
Name of the University
Author’s note

MATERIALITY1
Table of Contents
Discussion..................................................................................................................................1
Definition of materiality.............................................................................................................1
Regulatory requirements of materiality from a reporting perspective.......................................2
Material issues in business and society with examples from the chosen company...................4
Challenges of reporting using materiality..................................................................................6
References..................................................................................................................................8

MATERIALITY2
Discussion
Definition of materiality
According to National Australia Bank, materiality is defined with the help of
Corporate Responsibility Framework. Through this framework of principles, the company
seeks to ensure fundamentals which include rights of the customers, being a good employer,
addressing its responsibilities for the society. The company further defines materiality as the
concept which is used in the financial information provided by the company. A financial
information is denoted to be material when a reasonable person can view or alter such
information on the basis of his own perspectives (Lakis & Masiulevičius, 2017). Most of the
relevant information present in the financial statements are recognised as material as they
influence the judgement of a knowledgeable person. The concept of materiality is also known
as materiality constraint.
The company has recognised its material items and defined them as those items which
can individually or collectively affect the decisions of users or any reasonable person
(Bellandi, 2018). According to National Australia Bank, materiality can also be termed as the
magnitude of the misstatement that is present in the accounting information which would
influence the decision of a person who is providing the judgement of the information.
The company has realised the importance of materiality while their financial
statement preparation is in progress. Materiality is a subjective concept and it advises the
companies to disclose only valid and relevant information about the transactions of the entire
financial year (Moroney & Trotman, 2016). The transactions should be large enough to
outlive the operations of the company. The company has the obligation to account for
substantial amounts of transactions in such a way that it complies with the principles and
regulations of financial accounting.