Index

Citation

Bellandi, F. (2017), "Index", Materiality in Financial Reporting, Emerald Publishing Limited, Leeds, pp. 397-411. https://doi.org/10.1108/978-1-78743-736-420171002

Publisher

:

Emerald Publishing Limited

Copyright © 2018 Emerald Publishing Limited

---

INDEX

AA1000 AccountAbility Assurance Standard

, 314

Abuses, by financial statements management

, 354–371

absolute amounts

, 363

agency conflicts

, 365

aggregated benchmarks

, 357

aggregation risk, ignoring

, 357

audit, statement

, 362–363

below materiality threshold

, 355–356

change in judgment

, 367–368

commentary

, 365

consolidated financial statements

, 368

contra-asset/provision items

, 360–361

delegation, to service organization

, 369

difficult to understand

, 364

entity’s circumstances

, 368

failure to disclose

, 355

far in time

, 364

income shifting

, 361

income statement orientation

, 358–359

manual adjustments

, 371

materiality game, change

, 360

materiality high, setting

, 356–357

materiality, uses/misuses of

, 354

offset

, 357–358

persistent behaviors

, 370

presentation vs. disclosure game

, 359

reclassifications/continuous restatement

, 366–367

shooting, moving target

, 369–370

static vs. dynamic benchmarks

, 358

unbundling misstatements

, 361

undue cost/effort/impracticability

, 360

unrecorded/uncorrected

, 371

watering information

, 366

AccountAbility

, 21, 46, 315

Assurance Standard

, 15

Accounting

, 342

concept, of materiality

, 74, 80

definition, of materiality

, 5

errors

, 114, 119, 124

estimates

, 202

critical

, 260–261

inherent level of imprecision

, 254

judgmental misstatements

, 256–257

linkage between estimation uncertainty

, 254–256

linkage between inherent imprecision/misstatements

, 257–258

linkage between materiality and sources

, 259–260

management bias

, 258–259

materiality effect on changes

, 259

reliability of materiality

, 261

risk of material misstatement

, 253–254

information

cost/benefit ratio

, 74

qualitative characteristics of

, 11, 16

literature

, 93

materiality

, 70

misstatements

, 159

policies

, 2, 115, 360

changes

, 329

disclosure of

, 117, 118, 120, 140, 353

with immaterial effects

, 117

scope of change

, 117

principle

, 149

qualitative characteristics of

, 10

standards

, 22, 31, 59, 93, 101, 102, 120, 151, 156, 159, 160, 212, 257

Accounting Standards Update (ASU)

, 17

Accounts receivables

, 342

Advisory Committee on Improvements to Financial Reporting

, 212, 213, 215, 220, 267

Aggregation

classes of

, 132

risk

, 183

AICPA

Auditing Standards Board (ASB)

, 45

Code of Conduct

, 20

Committee on Accounting Procedure

, 268

American Bar Association

, 73, 202

Annual financial statements

, 284

Argumentation

, 246

ASB. See Auditing Standards Board (ASB)

Aspect Boundaries

, 317, 319

Assertions, classification

, 161f

Assessing materiality

auditor

, 210–211

external professional judgment

, 210–211

judgment

documentation of

, 214

professional

, 211–214

reasonableness

, 214–216

and reassessment

, 216–217

quantitative

assurance

, 202

concept of

, 202–203

management discretion

, 208–210

material

, 204–208

meaning of

, 203–204

vs. qualitative criteria

, 200–201

requirement

, 204

in segment reporting

, 285–287

Assets

, 327

impairments

, 90, 361

investment

, 237

pledged

, 237

tangible

, 251

ASU. See Accounting Standards Update (ASU)

Attributes, of materiality

, 47–61

AU-C Section

, 200, 201, 205–207, 210, 211, 213, 217, 219, 222, 224–229, 231, 232, 234–236, 243, 246, 253, 256, 257, 262–265, 267, 269, 271, 273, 275, 284, 285

Audit

, 342

firms

, 232

guidance

, 231

internal

, 362

literature

, 231

US

, 240

practice

, 239

procedures

, 78

risk

, 166, 185

and materiality

, 162, 163f

materiality effect on

, 164f

types

, 162

standards

, 49, 54, 71, 73, 77, 82, 118, 127, 135, 143, 144, 155, 156, 159, 185, 205, 207, 211, 216, 224, 225, 230, 234, 253, 258, 262, 269, 283, 285, 304, 318, 368

Audit Committee

, 78

errors and other legal consequences

, 349

Auditing Standards Board (ASB)

, 143, 144, 155, 156, 159–161, 166–171, 200, 207, 210, 342

transactions/balances/disclosures

, 135

UK

, 244

Auditors

, 2, 76, 81, 83, 118, 124, 143, 150, 153, 158, 162, 166, 172

communication, effect on materiality

, 169f

management for justifications

, 210

opinion

, 241

reassessment

, 216

report

, 362

response to fraud, effect on materiality

, 170f

response to illegal acts, effect on materiality

, 171f

uses of materiality by

, 77–79

Balance sheet

, 359

Basic Inc. v. Levinson (1988)

, 88

Basis for Conclusions of IASB

, 253

BC48-BC49 testimony

, 209

Behavioral issues

, 349–350

component materiality

, 368

of organization

, 274

persistent

, 370

professional

, 354

Believe

, 366

Benchmark

, 231

capital structure

, 237–238

choosing

, 234–235

common

, 231–232

company life cycle

, 238

deciding percentages

, 236

degree of aggregation

, 239

normalizing

, 235–236

pervasiveness

, 238

relative vs. absolute measures

, 232

rules of thumbs

, 232–234

type of industry

, 237

volatility

, 236–237

Benefit plan disclosures

, 330

Biased management

, 356

Bookkeeping

errors

, 28, 153

direct impact on financial statements

, 153

immaterial

, 157

indirect impact on financial statements

, 153

vs. immaterial misstatements

, 155

vs. financial statements

, 151

misstatements

, 156

immaterial

, 157

Business ethics

, 4

Business model

, 96

Capital disclosures

, 328

CAQ. See Center for Audit Quality (CAQ)

Carry-over effect

, 245, 246

Cash flows

, 2, 3, 16, 18, 51, 62, 105, 127, 129, 136, 329

information

, 329

segmental

, 329

Center for Audit Quality (CAQ)

, 18

forums

, 234

Chartered Financial Analyst (CFA) Institute

, 217, 253

Checklist

, 215, 349

Civil liability

, 41

Codification

, 123, 126

Collective assessment

, 262

Common Conceptual Framework

, 15, 23, 26, 43, 47, 75, 77, 79, 80, 94

qualitative characteristics

, 13f

Common law

fraud

, 43

materiality in

, 43

Companies Act

, 156

Company’s policies

, 364

Comparative information

approach

, 241

basic period, in focus

, 239–240

corresponding figures vs. comparative financial statements approach

, 240–243

counterbalancing/noncounterbalancing misstatements

, 251–252

financial/forensic analysis

, 252–253

financial position, third statement

, 243

materiality

benchmarks, effect of changes

, 250

in future periods

, 243–244

in prior period

, 240

misstatement effect

, 250–251

structure of notes

, 252

uncorrected immaterial misstatements

, 244–250

Component auditor

, 229

Component materiality

, 228, 229

vs. group materiality

, 229

pro-rata allocation

, 229

Conceptual Framework

, 32, 145, 256, 360

2015 Exposure Draft

, 44

IFRS amendments to

, 92

in materiality

, 10–33

CON 2 materiality

, 11, 16, 246

user-specific qualities

, 10

Consensus materiality

, 104, 105f

Consolidated financial statements

, 227

Consultation Paper

, 225, 318

Contingent liabilities

, 205

Core statements

, 95

Corporate governance

, 99

disclosures

, 145

Corporate planning

, 104

Corporate reporting

, 60, 99

COSO

, 201

identify and assess risks

, 174

internal control over financial reporting

, 176

risk tolerance

, 176

Counterbalancing material misstatements

, 359

Counterbalancing/noncounterbalancing misstatements

, 251

CPA practitioners

, 350

Credit quality

, 335

Credit risk

disclosures

, 334

management practices

, 334

Criminal penalties

, 274

Critical accounting estimates

, 149

disclosure

, 353

guidance

, 353

in MD&A

, 149

SEC Staff

, 150

Custodian

, 101

Customer options, materiality of

, 341

Degree of aggregation

, 239

De Minimis

, 115

Disaggregation

, 242, 243

Disclosure Initiative

, 26, 32, 43, 76, 81, 93, 142, 348, 349

Amendments

, 103, 114–116, 126, 129, 134

to IAS

, 1, 252, 253

project

, 116

tentative model

prior period errors accumulation

, 250

Disclosures

, 278, 329

cash flow

, 329

changes in accounting policies

, 353

of critical accounting estimates

, 353

differential

, 92

effectiveness initiative

, 6, 27, 86, 92, 93, 103, 124, 125

of financial assets

, 140

forward-looking

, 146, 146f

framework

, 4, 5, 16, 18, 93, 139, 280

issuer’s disclosure controls and procedures

, 352

materiality dimensions for

, 137

overload

, 83

principles-based

, 139

quality of

, 138

relevance

, 16, 137

disclosure based on

, 137f

requirements

, 6, 125, 132, 139

as per SEC

, 139

in Regulation S-K

, 6

in Regulation S-X

, 6

rules-based

, 139

Discretion

, 209

Dividends, classification of

, 329

Documentation

, 265

Economic materiality

, 95

EFRAG

, 50, 85, 122, 123, 136, 244, 326, 350

EGCs. See Emergency Growth Companies (EGCs)

Emergency Growth Companies (EGCs)

, 86

Entity’s business model

, 336

Error accumulation process

, 248

Errors treatment

, 275

ESMA. See European Securities and Markets Authority (ESMA)

Estimation uncertainty

, 328

European Securities

, 274

European Securities and Markets Authority (ESMA)

, 32, 50, 51, 82, 85, 122, 135, 136, 225, 274, 316, 326

consultation paper

, 219, 244

Ex ante, documentation forces discipline

, 214

Exchange Act

, 42, 56, 157

materiality and

, 40

Exchange transaction

Expectation gaps

, 86

Eyes of management model

, 99

Fair value measurement disclosures

, 338

FASB. See Financial Accounting Standards Board (FASB)

Federal Securities laws

, 72

Financial accounting

, 20

Financial Accounting Standards Board (FASB)

, 2, 18, 124, 201, 266, 349, 352

Disclosure Framework

, 5

FASB ASC

, 250-10, 240, 246

FASB ASC

, 280-10-50-1, 228

FASB ASC 250-10-S99-1

, 217, 219, 220, 234, 237, 262–264, 269, 270, 355

FASB ASC 250-10-S99-2

, 232, 246, 252, 359

FASB CON

, 2, 40

simplification initiative projects

, 5

Financial information

, 79, 82

qualitative characteristics of

, 10, 16

Financial instruments

, 132, 140, 141

classes

, 132

Financial investing

, 46

Financial liabilities

, 140

Financial performance

, 2, 3, 131, 328

Financial position

, 141

Financial reporting

, 2, 10, 27, 42, 45, 72, 74, 76, 213

frameworks

, 82

fraudulent

, 97, 100

materiality in

, 61

special-purpose

, 93, 94

standards

, 5

Financial statements

, 2–4, 10, 15, 20, 26, 51, 59, 77, 80, 84, 93, 94, 97, 116, 118, 120, 121, 123–125, 127, 129, 142, 144, 150, 157, 170, 171, 342, 345, 365

aggregation

alternative model

, 133

bottom-up model

, 131

assertion level

, 310

audit of

, 54, 175

circumstances

, 308–310

compliance

, 102

in conceptual framework

, 10

disaggregation, top-down model

, 129

and financial information

, 59

general-purpose

, 59, 77

improvement of effectiveness

, 348–349

level

, 305–308

management, abuses by

, 354–371

material information in

, 63

preparation process

, 365

Financing component, materiality of

, 341

Fixing America’s Surface Transportation Act

, 6, 21, 86, 103

Flexibility zone

, 97f

Foreign Corrupt Practices Act (FCPA)

, 157

Forensic accounting analysis

, 264

Forensic analysts

, 358, 366

Form 20-F, of IFRS foreign private issuers

, 248

Framework of the Climate Disclosure Standards Board

, 19, 23

Fraud

, 207

fraudulent financial reporting

, 356

GAAP. See Generally Accepted Accounting Principles (GAAP)

Generally Accepted Accounting Principles (GAAP)

, 3

disclosure requirements

, 208, 355

US GAAP states

, 268

Global Reporting Initiative (GRI)

, 25, 319

likelihood/magnitude

, 315

Government loan

with below-market rate of interest

, 331

Government-related entities

, 342

GRI. See Global Reporting Initiative (GRI)

Heat maps

, 86

Held-to-maturity securities

, 141

IASB. See International Accounting Standards Board (IASB)

IAS 8 definition, of material misstatement

, 249

ICAEW

, 32, 51, 122, 124, 206, 226

guidance

, 244

on materiality for UK entities

, 145

states

, 233

ICOFR. See Internal control over financial reporting (ICOFR)

IFAC guide

, 207, 233

to ISAs

, 244

IFRS. See International Financial Reporting Standards (IFRS)

conceptual framework, assessor in

, 55

foreign private issuers

, 351, 353

IFRSs express

, 326, 327

requirements

, 345

Illegal acts

, 205

Immaterial

, 22, 119

disclosures

, 172

errors, intentional

, 154

information

, 122, 124, 150

allowed disclosure of

, 123

item

, 168

misstatements

, 114, 124, 153, 155

in ICOFR

, 184

intentional

, 155

Impairment losses

reversals of

, 331

Impracticability

, 31, 119

Inapplicability

, 115

Income statement gains

, 333

Income tax

, 327

Industry Working Group score

, 316

Information

, 325–340

aggregation

, 128, 128f

disaggregation

, 128, 128f

Inherent estimation uncertainty

, 255

Inherent risk

, 162

materiality and

, 166f

Integrated reporting

, 15, 46, 54, 61, 71, 82, 86, 99, 104, 106, 136, 203

framework

, 18, 25, 202, 319

materiality

, 19

definition

, 96

Intention, failure to reassess

, 367

Interim amounts

materiality and audit risk of degree of estimation

, 282

Interim financial statements, goal of

, 277

Interim reporting

, 280

Internal control over financial reporting (ICOFR)

, 172

International Accounting Standards Board (IASB)

, 2, 10, 104, 201, 203, 204, 216, 260, 326–345, 356

basis for conclusions

, 253

disclosure initiative

, 15

projects

, 5

four-step approach

, 303

framework

, 16, 18f, 23, 43, 46, 75, 80, 134, 202

qualitative characteristics

, 12f

IFRS 16 recognition or measurement requirements

, 326

practical implications

, 326

principles of disclosure project

, 45

staff

, 201, 203, 206, 241, 281

users’ decisions

, 342

International Auditing and Assurance Standards Board (IAASB)

, 26

discussion paper

, 253

International Auditing Standards

, 240

International Financial Reporting Standards (IFRS)

, 2, 44, 208, 326–345

departures

, 327

references to materiality triggering-specific actions

, 343–344

requirements

, 2, 327

International Public Sector Accounting Standards (IPSAS) framework

, 11

qualitative characteristics

, 14f

Inter-period comparability

, 327

Investors

, 118, 124

Investors Technical Advisory Committee (ITAC)

, 320

Involuntary accounting

, 118

Iron curtain approach

, 245

ITAC. See Investors Technical Advisory Committee (ITAC)

Item

, 47, 122

vs. its content

, 48

IT systems

, 360

JOBS Act of 2012

, 86

Judging intention

, 271

Judgments

, 209

in applying accounting policies

, 328

misstatements

, 256

Jumpstart Our Business Startups Act

, 6

KPIs

, 269

Layered disclosure

, 151

Lease disclosures

, 339

Liabilities

, 327

Likelihood/magnitude mapping applied to reliability

, 261

Magnitude/likelihood model

, 90, 90f, 313

Management

absolute amounts

, 363

bias, defining

, 258

commentary

, 143, 365

communication

, 353

financial accounting treatment

, 350

internal

, 362

multinational groups

, 368

reporting

, 100

typical materiality abuses

, 354

Manipulation

, 356

income statement

, 358

Material aspects

, 317

Material disclosures

, 6

Material information

, 70, 125

in users’ decision process

, 87f

Material item

, 138

Materiality

, 2

application, levels of

, 79, 120

component

, 227–231

consolidated vs. entity/separate financial statements

, 227

at lower levels

, 225–227

whole financial statements

, 224, 225

applied to

bookkeeping

, 151–159

internal control over financial reporting

, 172–187

management commentary

, 143–151

presentation and disclosure

, 120–143

recognition and measurement

, 114–120

assessment of

, 47, 85, 351

securities regulators

, 82

in auditing

, 159–172

literature

, 33

augmentation in segment reporting

, 286

concept of

, 82, 83f

vs. cost/benefit constraint

, 30

decision on

, 79–82

definition

, 33–47

comparison

, 34f

as per IASB

, 76

as per US Supreme Court

, 59, 60, 71

determination

, 106, 316

process

, 302

dimensions of

, 95, 96f

disclosure dilemma

, 94

discrimination

, 104

entity specificity of

, 20

for financial reporting

, 19

financial statements, role in

, 27

graduation of

, 85f

vs. impracticability

, 30

like inventory

, 357

as managerial concept

, 79

objective of

, 10

paradox

, 348

as planning tool

, 104f

principle

, 317

prudence/neutrality, effect on

, 27

vs. relevance

, 16–19

in CON 2

, 17f

relevance, relationship

, 24f

reliability, interaction with

, 28

standard-specific, defined

, 326

tests

, 50, 72

vs. understandability

, 25

users of

, 80

uses and effects

, 70–79

Material misstatements

, 31, 78, 158, 186

classification

, 160

definition

, 160

in estimation range

, 257

in point estimate

, 257

risk and assertion

, 161

Material non-adjusting events

, 330

Material permits auditors

, 3

Measurement bases

, 140

Misstatements

, 263, 350, 355–359, 361

accounting policy

, 370

balance sheet

, 357, 359

immaterial

correction of errors

, 274–275

GAAP

, 267–268

immaterial errors, material effect of accumulation

, 269, 273–274

intentional immaterial misstatements

, 269–271

interim financial statements, materiality for condensed format of

, 283

judge intentions

, 271

legal consequences

, 275

objective element, investigating

, 272

particular presentation/influencing users

, 271–272

policy to ignore

, 272–273

relevant to audit

, 273

tone from top

, 275

treatment of errors

, 275–277

individual vs. cumulative

, 261

aggregation technique/absolute value

, 263

analysis at cumulative level

, 262

analysis at individual item level

, 261–262

offsetting misstatements

, 262–263

trends/ratios

, 263–264

intentional immaterial

, 355

materiality

annual financial statements

, 280–281

audit considerations

, 283–284

correction of errors, reporting for

, 278–279

estimation uncertainty and materiality

, 281–283

in interim reporting for changes in estimates and accounting policies

, 279–280

MD&A, interim periods

, 284

of prior period

, 247

reference period under IFRS

, 277–278

reference period under US GAAP

, 278

small vs. large

, 221

unbundling

, 361

Misuses, of materiality

, 354

Multinational companies

, 371

Non-current assets

, 332

Obligation

, 330, 331, 340, 341, 346

Offset

, 357–358

Organization-wide basis

, 314

Ownership triangle

, 100, 100f

Paragraph exemplifies risk-level graph technique

, 311

Party

, 331, 341, 342, 345

Performance materiality

, 222

to assess estimation uncertainty

, 222

to assess point estimate

, 223

Performance obligations, materiality to assess

, 341

Perfunctory

, 340, 346

notion of inconsequential

, 340

performance obligations, inconsequential

, 340

Pervasiveness

, 224

Pharmaceutical industry

, 237

Post-end assessment

, 264

Post Implementation Review of IFRS 8 notes

, 287

PP&E

accounting treatment

, 330

gains on disposal

, 330

information

, 330

Practice Statement

, 210, 349

Practice Statement Exposure Draft (ED)

, 15

Precision of control

, 184

Probability/magnitude mapping

, 86

Professional judgment

, 211

Prudent investor

, 53

Public Company Accounting Oversight Board (PCAOB)

, 71, 213, 221

Qualitative disclosures

, 120

Quantitative metrics

, 203

Quantitative thresholds

, 218

absolute dollar amount, case of

, 218

adjustment method

, 223

materiality

decided by auditors

, 223–224

process analysis of

, 223

misstatement

, 219

large

, 219–221

small

, 219

needs

, 217

performance materiality

, 221–223

role of

, 217–218

Reasonable investor

, 52–53, 73

Record-keeping procedures

, 151

Regulation S-K

, 21, 56, 86, 103, 147, 150, 205

disclosure requirements in

, 6

Regulation S-X

, 56, 60, 94, 116, 122, 123, 132, 142

disclosure requirements in

, 6

for filings of financial statements

, 41

materiality definition

, 33

Regulatory literature

, 342

Related party

, 341

disclosures

, 331

relationship

, 206

transactions

, 226, 325

Resource allocation

, 47, 51

Retrospective accounting change

, 141

Revenue disclosures

, 339

Reviews, IFRS financial statements

, 351

Risk appetite

, 177

and risk tolerance

, 179f

Risk-level graphs

, 86, 88f, 312

decoupled effect

, 89f

single effect

, 89f

Risk management strategy

, 333

Risk tolerance

, 176

in financial reporting

, 180

as indirect measure of materiality

, 181

and materiality

, 180

and performance materiality

, 182f

and precision of controls

, 182

Roll-over approach

, 245, 274

Rule 4-02 of Regulation S-X

, 268

Sarbanes-Oxley Act (SOX)

, 91, 172

Satellite reports

, 95

Scarce resources

, 360

Securities Act of 1933

, 143

schedule A

, 205

Securities and Exchange Commission (SEC)

, 6, 21, 146

Advisory Committee on Improvements to Financial Reporting

, 81

Commissioner Arthur Levitt

, 218

disclosure system

, 86

staff

, 235, 243, 265, 279, 351–353, 358

Securities Exchange Act

, 42, 143, 157

Securities investors

, 92

Securities laws

, 43, 76, 82

Securities regulators

, 101

Sensitivity analysis

, 330, 336

Service-level agreements (SLAs)

, 369

Signal management intentions

, 271

Significance/influence matrix

, 316

Simplification Initiative

, 5

Smaller Reporting Companies (SRCs)

, 86

Sommer Report

, 205

SRCs. See Smaller Reporting Companies (SRCs)

Staff skills

, 360

Stakeholders

, 99

Standard-setters

, 74, 80

view

, 348

Statement, of cash flows

, 329

Stock Exchange reaction

, 266

Subtotals, reconciliation of

, 328

Sustainability Accounting Standards Board (SASB)

, 47

sustainability reporting

, 316

Sustainability reporting

, 60

Sustainable Accounting Standards Board

, 39

Tax liabilities

, 330, 354

Tax reconciliation

, 330

Time pressure

, 360

TMT industry

, 237

Trading securities

, 141

20-F, of foreign private issuers

, 347

U-Materiality

, 103

Under Integrated Reporting

, 217

United States Securities and Exchange Commission (SEC)

, 351

Unit of account

, 341, 346

Units-of-delivery

, 343

Users

decisions

, 342

expectations

, 304

of financial statements want

, 326

need information

, 327–339

want

, 327–339

standard

, 326

Verification

accounting changes, implication

, 266–267

approaches to verify materiality ex post

, 265–266

assessing decisions

, 264–265

documentation

, 265

methods to assess estimates

, 267

Voluntary change

, 242

World Resources Institute (WRI)

, 46

Written procedures

, 370

Zero materiality

, 107