Example

ISA 320, Audit Materiality, talks about materiality in terms of amount (quantity) and nature (quality).

An example of qualitative materiality is inadequate or inaccurate disclosure of an accounting policy so that users could be misled.

Also, non-compliance with an IAS/IFRS can lead to material misstatements and failure to disclose related party transactions would fall into that category.

There is a reference in ISA 320 to the IASB’s Framework for the Preparation and Presentation of Financial Accounts where it says that materiality depends on both the size of the item or error judged in the particular circumstances of it omission or misstatement.

I think an example could be an error which turns a small loss into a small profit. This could give false hope to shareholders if they conclude that the company is at last improving.