Materiality the Qualities of Relevance and Significance in Public Sector Reporting


By Marcel Holder Robinson, Finance Policy Manager (Governments)

The basis of deciding what to include or exclude from any report is predicated on the concept of materiality. The Integrated Reporting <IR> Public Sector Pioneer Network, in its recent webinar 'Materiality in Integrated Reporting for the Public Sector', explored the materiality principle in the context of <IR> and provided some practical examples of its application. 

One challenge that readily comes to mind when considering materiality in public sector reporting is the plethora of standards/requirements for reporting, and how materiality is interpreted in each context. Work has already begun, with the Corporate Reporting Dialogue – comprising eight of the major organisations responsible for standard setting and guidance on reporting – producing a Statement of Common Principles of Materiality. 

Although it focuses on the private sector, many of these standards are applicable to the public sector, for example, International Organisation of Standardization (ISO) Standards, Climate Disclosure Standards, Sustainable Accounting Standards and International Financial Reporting Standards. The statement compares materiality definitions and approaches across the respective standards/guidelines and clarifies the reporting concepts.

The International Integrated Reporting Council (IIRC) and the International Federation of Accountants (IFAC) published Materiality in <IR> Guidance for the preparation of integrated reports which sets out how organisations should prepare content, establish parameters for their materiality determination process and embed them in their management processes. It states that “in integrated reporting, a matter is material if it could substantively affect the organisation’s ability to create value in the short, medium and long term.”

Within the International <IR> Framework (the Framework), materiality is considered from three angles – process, results and accountability – which are covered in the following sections of the Framework:

  • 1G Using the Framework: Responsibility for an integrated report
  • 3D Guiding principles: Materiality
  • 4H Content elements: Basis of preparation and presentation.

The webinar focused on these three aspects and some highlights are shared below.


How does the organisation decide what’s material for reporting purposes? What process does it follow? What are the key steps in that process?

Preparers of integrated reports are encouraged to consider carefully the process their organisation uses to determine which matters should be included in their integrated report. Additionally, the process should consider how those matters will be evaluated or quantified. The Framework sets out the stages of a materiality determination process to guide <IR> implementers. 
To assist in that determination, public sector organisations are encouraged to consider firstly the audience of the integrated report because this is integral in establishing both what goes into the report and what does not. 

Laura Leka, Programme Lead at the IIRC, shared that within the public sector, identifying the audience is “particularly important to consider due to the complexity of such organisations. The public sector is accountable to a wide and diverse range of stakeholder groups (including taxpayers, users of services, parliaments, legislators and markets), who often have conflicting needs.” Public sector organisations are expected to credibly demonstrate through their reporting how their stakeholders’ varying needs and expectations are managed, and ultimately how value is created through service provision.


What was the result or the outcome of the materiality determination process? Which matters did the organisation consider to be material for reporting purposes?

Sarah Grey, IIRC Markets Director, pointed out that the ‘result’ of the materiality determination process refers to those matters that should be disclosed and what needs to be said about them. The guide recommends reporting on matters that have a material effect on strategy, the organisation’s business model and the six capitals.  

The guide also suggests that consideration should be given to how each issue interacts with other factors to support or erode longer-term value. It is important to explain how these issues are being managed and the mechanisms in place to address them. Disclosure is further recommended on management’s approach to materiality determination, as well as the extent of their capacity to control those matters.

Sarah explained that some organisations cover their material issues over the normal course of their report (which is fine), while others find it useful to summarise their material issues in a list or matrix before proceeding to a deeper discussion. 


How have those charged with governance and other key personnel been involved in identifying, prioritising or validating material matters? Does the reader get a sense of who owns, or is accountable for, the process and its results?

The report should disclose the role that persons charged with governance play in the process. Some examples cited include endorsement of and signoff on the materiality determination process; consideration of the material issues raised and the action taken; and monitoring of material matters identified during the process through formal mechanisms, such as agenda items at meetings of those charged with governance.

Case study

Karen Koch, Chief Advisor of Integrated Reporting at Eskom Holdings SOC Ltd in South Africa, shared how her organisation developed and aligned their <IR> materiality determination process to their reporting environment.  

<IR> Materiality Determination Process


As a wholly state-owned entity, Eskom is the primary electricity supplier in South Africa. It generates, transmits, distributes and sells approximately 90% of the electricity used in South Africa, also supplying to neighbouring countries. Their materiality determination process is based on the guidance set out in the <IR> Framework and reflects the following features:

  • The process is performed annually.
  • The starting point is examining matters reported in the prior year, followed by a review of any changes in the current year.
  • Matters are identified through a review of board minutes, the outcomes of their risk management process and matters raised by stakeholders through various channels (eg stakeholder relations team, investors, media, and parliamentary questions).
  • The importance to stakeholders of identified matters is assessed, together with the impact of those matters on Eskom and its ability to create value over time. 
  • Matters are then prioritised and ranked in a stakeholder materiality matrix, with further disclosure of material matters.
  • As part of the process, consideration is given to the reporting boundary. Ensuring that risks and opportunities are identified through an upstream and downstream analysis of the value chain is very important to determine their impact on value creation.

Discover more:

  • To learn more, you can access the webinar recording by clicking here. You will need to enter your name and email address to view it. 
  • CIPFA and the <IR> Public Sector Pioneer Network has launched a Public Sector Application Notes Project to support public sector organisations in learning more about implementing Integrated Reporting. If you are interested in this project or would like to participate in the network’s upcoming activities, please contact

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