14Materiality

SECTION 14 Materiality

Overview

Particular values or components are considered material to the overall result of a calculation when their mis-statement or omission would cause that result to be misleading to the users of the information.

Materiality tests assess the significance of the particular value/component by relating it to the amount of the overall result to which it contributes.

14.1 The Policy Liability determined in accordance with this standard is subject to materiality standards applied at a statutory fund level.

14.2 The base amount for materiality purposes is:

1. in respect of components of the profit and loss statement, the operating profit; and
2. in respect of components of the regulatory balance sheet, the difference between the assets of the statutory fund and the sum of the Policy Liabilities and Other Liabilities of that fund.

14.3 While materiality must be applied at the statutory fund level, so that appropriate values are placed on the policy liabilities of each fund, the materiality of the statutory fund relative to the size of the company overall may be taken into account.

14.4 While assessing materiality will always be a matter of professional judgement, the following quantitative thresholds are generally to be used:

1. variations in amounts of 10% or more of the base amount may be presumed material; and
2. variations in amounts of 5% or less of the base amount may be presumed immaterial.