Quantitative approach of materiality of the information disclosed in the financial statements and the explanatory notes of brazilian food industry companies

Abstract

This study investigated compliance with quantitative criteria of materiality information disclosed in financial statements and explanatory notes of companies in the processed food industry for the seven financial years from 2010 to 2016. Considering the quantitative criteria known in the academic literature, this study proposed to (i) to calculate the materiality of companies based on the quantitative criterion of 1% of Net Revenue; (ii) verify if the items disclosed in the Financial Statements and in the Explanatory Notes comply with these criteria and (iii) calculate the average percentage of items that do not meet the materiality of 1% of the Net Revenue. The results obtained made it possible to verify that the Balance Sheet was the most significant non-material disclosure, with an average of 35%, followed by the Statement of Added Value (34%), by the Statement of Cash Flows, with 32%, and by the Statement of Income for the Year, with 27%. The analysis showed that the average percentage of items that did not meet the materiality of 1% of Net Revenue in the explanatory notes was well below those calculated for the financial statements, represented by an average of only 6%. In addition, the results show a reduction in the averages, the maximum and the range of the percentage of information disclosed below the materiality from 2014, which can be attributed to the approval and disclosure of OCPC 07, occurred that year.