Public Sector Accounting and Budgeting

The International Public Sector Accounting Standards Board® (IPSASB®) has released Exposure Draft (ED) 97, IPSAS Practice Statement, Making Materiality Judgments for public comment by August 28, 2026. 

Materiality is a fundamental concept in financial reporting, functioning as a filter that ensures the financial information provided is relevant for accountability purposes and useful for decision-making. Information is considered material if omitting it, misstating it, or obscuring it could influence decisions or accountability. In practice, however, applying this concept can be challenging, and some IPSASB stakeholders have used the disclosure requirements in IPSAS® Standards as a checklist rather than applying professional judgment. 

Last year, the IPSASB conformed its definition of material. Now, the IPSASB’s proposed non-mandatory guidance in ED 97 aims to help preparers apply materiality more effectively when preparing financial statements under IPSAS Accounting Standards.  

ED 97 describes a practical, four-step approach to identifying, assessing, organizing, and reviewing potential material information. The guidance does not change existing requirements but supports more consistent and informed application of materiality across IPSAS Standards. 

“Materiality helps entities determine what information to include in or exclude from financial statements, and our proposed guidance in ED 97 provides a systematic approach to making such judgments,” said IPSASB Chair Thomas Müller-Marqués Berger. “We want to hear from our stakeholders if this guidance can help them make judgments more confidently and consistently in practice, and where additional clarity may be needed.” 

The guidance was adapted by the IPSASB for public sector use from the IFRS® Practice Statement 2: Making Materiality Judgements. The IPSASB encourages input from preparers, auditors, and other stakeholders to ensure the final IPSAS Practice Statement reflects real-world application in public sector financial reporting.