EFRAG welcomes the debate on the concept of materiality and its application encouraged by ESMA's consultation paper.  EFRAG notes that under the Conceptual Framework 'materiality' is an aspect of relevance underscoring the need for the financial statements to provide information that is useful to users for economic decision-making.

EFRAG believes that the materiality judgements should not be made in isolation, and that it is important that surrounding circumstances always be taken into account. Accordingly, whilst quantitative thresholds are helpful in highlighting the areas that require attention, they should never be applied mechanically without relevant qualitative factors.

A key message in the draft comment letter is that should the need for further clarification emerge from this debate, EFRAG believes it is the role of the IASB to provide the guidance. In EFRAG's view, that does not diminish, but supports the critical role ESMA has to ensure consistent application across the European Union of IFRS As defined globally.

Comments are invited by 27 February 2012 (extended to 16 March 2012).