Abstract
The need to make judgements as to materiality is pervasive in the preparation of financial statements as well as in audit activity. The objective of this chapter is to present the importance and the complexity of materiality in financial accounting and how this term was used in the financial statements of selected companies. The importance and the complexity of materiality in financial accounting were studied using both a systematic review of six databases that include publications in the accounting discipline, as well as a critical analysis of “grey” literature. It was found that when assessing whether information is material to the financial statements, an entity considers both the specific circumstances and how the information provided in the financial statements responds to the information needs of primary users. The empirical study was based on content analysis which found that the term “materiality” represents an important issue used multiple times in the financial statements of selected companies, although without any explanation of the main quantitative or qualitative factors of materiality.
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Notes
- 1.
In addition to financial accounting the concept of materiality is used in the audit field, where its purpose is to enhance the degree of confidence of intended users in the financial statements. This chapter concentrates on financial statements.
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Karwowski, M. (2019). Materiality in Financial Accounting—Theory and Practice. In: Procházka, D. (eds) Global Versus Local Perspectives on Finance and Accounting. ACFA2018 2018. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-11851-8_19
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DOI: https://doi.org/10.1007/978-3-030-11851-8_19
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