What is Materiality?

In accounting terms, Materiality refers to the consequence of an omission or misstatement of information in a company's financial statements that could influence the economic decisions of users. Therefore the concept of materiality relates to the significant of transaction errors within a financial statement, and defines the threshold between which points the incorrect financial information becomes relevant to the decisions made by the user. Companies must report any material events within one month by filing SEC form 8-K.