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IPSASB: IPSAS Practice Statement - Making Materiality Judgments
- 20 May 2026
- Accounting
- South African Accounting Academy
Summary:
The International Public Sector Accounting Standards Board (IPSASB) has issued Exposure Draft (ED) 97: Proposed IPSAS Practice Statement - Making Materiality Judgments.
Article:
The objectives of this ED 97 are to develop and provide reporting entities with non-mandatory guidance on making materiality judgments when preparing financial statements in accordance with IPSAS® Accounting Standards, aligned with IFRS® Practice Statement 2 Making Materiality Judgements (Practice Statement 2), adapted to the public sector context.
The need for materiality judgments is pervasive in the preparation of financial statements. An entity makes materiality judgments when making decisions about recognition and measurement as well as presentation and disclosure. Requirements in IPSAS Standards only need to be applied if their effect is material to the complete set of financial statements.
This draft IPSAS Practice Statement:
- Provides an overview of the general characteristics of materiality.
- Presents a four‑step process an entity may follow in making materiality judgments when preparing its financial statements (materiality process). The description of the materiality process provides an overview of the role materiality plays in the preparation of financial statements, with a focus on the factors the entity should consider when making materiality judgments.
- Provides guidance on how to make materiality judgments in specific circumstances, namely, how to make materiality judgments about prior‑period information, errors, and covenants.
Whether information is material is a matter of judgment and depends on the facts involved and the circumstances of a specific entity. This draft IPSAS Practice Statement illustrates the types of factors that the entity should consider when judging whether information is material.
This draft IPSAS Practice Statement includes examples illustrating how an entity might apply some of the guidance in the [draft] IPSAS Practice Statement based on the limited facts presented. The analysis in each example is not intended to represent the only manner in which the guidance could be applied.
IPSAS Accounting Standards relate to the general purpose financial statements (financial statements) and are authoritative. IPSAS Practice Statements are non-mandatory guidance. Unlike IPSAS Accounting Standards and IPSASB SRS Standards, IPSAS Practice Statements, and RPG Guidelines do not establish requirements. IPSASB SRS Standards, IPSAS Practice Statements, and RPG Guidelines do not provide guidance on the level of assurance (if any) to which information should be subjected.
Comments are due by 28 August 2026.
The 5-page At a Glance document can be accessed at https://ifacweb.blob.core.windows.net/publicfiles/2026-04/IPSASB-ED-97-AAG.pdf
Click here to download the 42-page Exposure Draft:
Relevance to Auditors, Independent Reviewers & Accountants:
- It is important to stay informed on publications issued by the regulators and standard-setters, e.g. IFAC & IPSASB.
- IPSAS Accounting Standards relate to the general purpose financial statements (financial statements) and are authoritative. IPSAS Practice Statements are non-mandatory guidance. Unlike IPSAS Accounting Standards and IPSASB SRS Standards, IPSAS Practice Statements, and RPG Guidelines do not establish requirements. IPSASB SRS Standards, IPSAS Practice Statements, and RPG Guidelines do not provide guidance on the level of assurance (if any) to which information should be subjected.
- This ED 97 provides reporting entities with non-mandatory guidance on making materiality judgments when preparing financial statements in accordance with IPSAS® Accounting Standards.
Relevance to Your clients:
- It is important to stay informed on publications issued by the regulators and standard-setters, e.g. IFAC & IPSASB.
- IPSAS Accounting Standards relate to the general purpose financial statements (financial statements) and are authoritative. IPSAS Practice Statements are non-mandatory guidance. Unlike IPSAS Accounting Standards and IPSASB SRS Standards, IPSAS Practice Statements, and RPG Guidelines do not establish requirements. IPSASB SRS Standards, IPSAS Practice Statements, and RPG Guidelines do not provide guidance on the level of assurance (if any) to which information should be subjected.
This ED 97 provides reporting entities with non-mandatory guidance on making materiality judgments when preparing financial statements in accordance with IPSAS® Accounting Standards.