Financial Materiality
Financial materiality refers to the concept that certain information or factors can significantly impact a company’s financial performance or financial statements and are therefore considered material for financial reporting purposes. Materiality is a fundamental accounting concept that helps determine the relevance and significance of information for decision-making by investors, lenders, and other stakeholders. In financial reporting, materiality is assessed based on the nature and magnitude of an item and the potential influence it may have on users’ decisions. Financially material information is considered significant enough to impact the assessment of a company’s financial position, financial performance, or cash flows. Materiality is a matter of judgement and depends on the specific circumstances of each company and its stakeholders.
