Glossary›Assurance, audit evidence and working papers›Material misstatement
Glossary term
Cluster A · A17
Tier 1 · differentiator
Material misstatement
Definition
A material misstatement is an error, omission or misclassification in a climate disclosure large enough or sensitive enough to change a reader’s decision. It can be quantitative, such as an understated emissions total, or qualitative, such as an omitted governance fact. Uncorrected material misstatements lead to a modified conclusion.
On this page
In practice
Three categories arise in first-year climate files. Factual misstatements are plain errors: a wrong emission factor, a transposed figure, a site counted twice. Judgemental misstatements are differences of opinion about an estimate or a boundary decision. Projected misstatements are the assurer’s extrapolation of sample errors across the whole population, and they are the category entities most often dispute, because the entity sees three small errors and the assurer sees an estimated error across a thousand items.
Qualitative misstatement is under-appreciated. Omitting the fact that the board received no climate risk reporting during the year is not a number, and it can still be material.
What the assurer does with it
The assurer accumulates every misstatement found, corrected or not, and presents the uncorrected list to management and the audit committee at the end. Management either corrects them, or provides a written explanation of why each is immaterial, which then appears in the management representation letter. If the aggregate of uncorrected misstatements exceeds materiality and management will not correct, the conclusion is modified. Plan for this conversation to happen close to the lodgement deadline.
Commonly confused with
Fraud. Most misstatements in first-year climate files are process failures, not misconduct, and the assurer treats them differently.
Sources
1
ASSA 5000 General Requirements for Sustainability Assurance Engagements
AUASB
2
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Registered company auditor
Next scheduled review
1 July 2027
Part of
Cluster A, Assurance, audit evidence and working papers
47 terms on what an assurance provider tests, what they accept as evidence, and what a preparer has to be able to produce.
Related terms
The threshold a misstatement is measured against
What an uncorrected material misstatement produces
What happens when the error sits in a published prior year
Related questions
What happens if the assurance provider disagrees with our numbers?
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Disagreement is normally resolved before it reaches the conclusion: the practitioner raises a query, you produce more evidence or adjust the number, and the file moves on. A modified conclusion only arrives if you decline to adjust something material, or if they cannot obtain the evidence they need. The second case is far more common in a first year and is entirely preventable through documentation.
What is the materiality threshold for climate disclosures?
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There is no prescribed number. Under AASB S2, information is material if omitting or misstating it could reasonably be expected to influence users’ decisions. Separately, your assurance practitioner sets a quantitative materiality for testing, and the two are related but different.
What happens if we have to restate last year’s emissions?
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You restate the comparative and disclose what changed, why, and the effect. Restatement is expected as data improves and is not treated as a failure. What the assurance practitioner tests is whether you have a written policy setting out when you restate, and whether you applied it consistently.
Other terms in this cluster
Material misstatement