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Date: 2019-12-14 Page is: DBtxt001.php list0300-Materiality-1

Definitions for TrueValueMetrics
Materiality

The idea of materiality is very important in the TVM context. Materiality is the very simple concept of putting focus on things that are important.

The KISS principle. Keep it short and simple ... KISS ... is a useful idea to keep in mind.

The best data are data that can be easily collected, easily understood, easily checked, reliable ... and useful.

TVM is committed to the idea that TVM data must have this characteristic ... but that the data should also be useful for more complex analysis as well as having a local community use.

In good accountancy, the data have utility and value in part because of the way data are organized. They help make it possible to focus on what is important. Good accountancy includes analysis about what is going to make a difference, without burying in costly inconsequential detail.

TVM does this for things that are important for the community ... with the purpose of having these data is to get something done that improves the status of the community. Modern society is drowned in information that tells us a lot about unimportant matters ... while there is very little reliable information about matters that are very important.

Many analysts do not realize how much time and effort they spend on matters that will have no impact on performance. And if the analyst does not understand what is material ... what hope is there that they will understand anything.

Materiality is the concept that helps focus effort and analysis on issues that matter. The accountancy version of “Don't sweat the small things!” There are many examples including reports that include cents in multi-million dollar tables, a sure sign that the analyst does not understand materiality.

By having a focus on material items, reporting can avoid getting overloaded with detail that matter little. Using materiality in reporting does not mean lesser matters are ignored ... everything is in the purview of the data acquisition ... and monitored. Materiality is based on a full range of data ... it is not a supposition unsupported by data.

Materiality is a very simple concept. Put focus on things that are important. By having a focus on material items, reporting can avoid getting overloaded with detail that matter little. Using materiality in reporting does not mean lesser matters are ignored ... everything is in the purview of the data acquisition ... and monitored. Materiality is based on a full range of data ... it is not a supposition unsupported by data.



The text being discussed is available at

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TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right. TVM is a 'big idea' that has the potential to be a game changer leveling the playing field so the wealth and power is shared on a more reasonable basis between people who work for a living and those that own the economy and the levers of power. In order to be effective, it cannot be funded in the conventional way with a for profit business plan, but absolutely must remain an open access initiative.
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