September 24, 2015 – How should materiality be applied? FASB weighs in
In late September, FASB issued two exposure drafts that address the use of materiality. In response to feedback that indicates FASB’s current discussions are inconsistent with the legal concept of materiality established by the U.S. Supreme Court, the proposals will update FASB’s current discussion of materiality in the board’s conceptual framework. These inconsistencies created uncertainty about organizations’ interpretations of material disclosures and FASB’s ability to identify and evaluate disclosure requirements in accounting standards. The proposals will address the use of materiality by helping organizations use discretion when determining which disclosures in the notes to the financial statements should be considered “material,” and helping FASB understand the reporting environment in which it sets accounting and reporting standards. Comments concerning the new proposals can be submitted on FASB’s website until December 8, 2015.