The UK Financial Reporting Council (FRC) has published guidance to help companies apply the principle of materiality in corporate reporting.
The guidance answers frequently asked questions and sets out a six-step illustrative process for applying materiality when preparing annual reports.
Mark Babington, FRC executive director of regulatory standards, stated: “Annual reports should be used as a communication tool, not a compliance checklist. We want to encourage preparers to engage with their investors and challenge themselves on what disclosures tell the most coherent story of their business.”
“Materiality is not about disclosing everything; it is about disclosing what matters. Companies should be confident in exercising judgement and focusing reporting on information that informs investor decisions and avoiding immaterial disclosures that can reduce clarity,” he added.
