The International Public Sector Accounting Standards Board (IPSASB®), developer of IPSAS® Standards, international accrual-based accounting standards for use by governments and other public sector entities around the world, has issued Definition of Material (Amendments to IPSAS 1, IPSAS 3, and the Conceptual Framework).

“The amendments aim to bring consistency into our guidance on the definition of material, helping organizations apply it more effectively,” said Ian Carruthers, IPSASB Chair. "A clear and well-understood definition will serve as a solid foundation for our planned guidance on how to make materiality judgments to be developed during the second phase of this project.”

The amendments:

• Clarify that an entity is required to consider the information needs of primary users instead of other users of GPFRs; and
• Align the definition of material in IPSAS 1, Presentation of Financial Statements, with Chapter 3 of the Conceptual Framework on Qualitative Characteristics.

The amendments will help strengthen accountability by ensuring financial statements focus on information most relevant to primary users. They will enhance consistency through conforming the definition of the term material between the Conceptual Framework and within IPSASB’s authoritative guidance and lay the foundation for planned guidance on materiality judgments in financial reporting.

The second phase of the project includes developing non-authoritative guidance aligned with IFRS® Practice Statement 2, Making Materiality Judgements, to efficiently and promptly address constituents' need for additional guidance on making materiality judgments when preparing financial statements in accordance with IPSAS Standards.

The amendments to IPSAS Standards in the Definition of Material (Amendments to IPSAS 1, IPSAS 3, and the Conceptual Framework) are effective January 1, 2027. An earlier application is permitted. The amendments to the Conceptual Framework are effective immediately.