The Principle of Materiality

Published: Jul 1, 2004

Application

In accounting there is the Principle of Materiality that guides a record-keeper in deciding when and where to place insignificant items. Basically, it states that if the expenditure to process far exceeds the value of an outcome then, ignore the item or dispense with it expediently. In plainer words, if it requires more effort than it's worth – forget it.

Of course, in accounting, the decision is tempered by the size of the amount, cumulative effect, external regulations such as taxation and contribution to the larger picture.

It's a great principle to invoke in many activities other than accounting. Associates and subordinates often give a sigh of relief when the manager invokes the Principle of Materiality. As well the manager often enjoys a sense of pride in thinking of the invoking.

Stories

Stories from members will add great value to these maxims

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Outcomes

Spending more time on the important matters.
Having a simple justification for dispatching the little things.
Avoid sweating the details.

The Principle of Materiality

Application

Stories

Outcomes

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