Audit Lowe Down – Material Accounting Policies: Moving towards less cluttered and more readable financial statements

Lowe Lippmann Chartered Accountants

Material Accounting Policies: Moving towards less cluttered and more readable financial statements


Many entities preparing financial statements are required to comply with AASB 101 Presentation of Financial Statements. This standard requires disclosure of accounting policy information, however from 31 December 2023 the requirement has shifted from disclosing significant accounting policies to focusing on material accounting policy information.


This aims to enhance the relevance of financial statements by ensuring that only material information about accounting policies, i.e. information that is essential for understanding the entity’s financial performance and position, is disclosed.


Financial statements should no longer have pages of boilerplate words detailing accounting standard requirements included in the accounting policy section. The accounting policies disclosed should be specific to the entity covering:

  • Changes to accounting policies
  • Selection of options with accounting standards
  • Information relating to significant judgements and estimates
  • Development of an accounting policy for a specific transaction not explicitly covered by the accounting standards
  • Accounting treatment for a particularly complex transaction.


Instead of a checklist approach, the focus is now on whether the information is material to the users of the financial statements and will result in less pages, less clutter and more focussed information to users which must be a good thing. In addition, restructuring the accounting policy information into the relevant notes means that users have all the information on a particular topic in the one place.


During the last few months, we have been working with clients on implementing these changes and have seen reductions in accounting policies (and associated pages of the financials) of between 50 and 80% with positive user feedback on the new structure.


Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

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