The Application of the Accounting Concept of Materiality in the Italian Listed Companies’ Financial Statements

The concept of materiality in the process of preparing the financial statement is essentially a matter of disclosure. In fact, financial statement should disclose only the information that are material, namely those that can impact on the decisions of users. However, how concretely to apply the concept of materiality is not generally prescribed by accounting standard setters. As a result, previous studies show that materiality judgements exhibit considerable diversity and remain primarily a matter of professional judgment. This study aims to explore how the concept of materiality has been interpreted and applied in practice by a sample of Italian companies, that adopt the Italian accounting standards, with respect to a set of information that should be disclosed in the financial statements only if they are judged material.