FASB Ceases Work on Proposal To Amend Definition of “Materiality” for US GAAP
As previously discussed in the September 1edition of Corporate & Financial Weekly Digest, the Financial Accounting Standards Board (FASB) had issued Proposed Accounting Standards Update (ASU) No. 2015-310, in which the FASB had proposed to remove its definition of materiality established in Concepts Statement No. (CON) 8, Conceptual Framework for Financial Reporting, in favor of relying on the US federal courts’ definition of materiality. The proposed change was intended to allow businesses to use discretion to determine whether certain information should be considered “material” and included in a financial statement footnote. After two years of criticism of the proposal, including from investors and investor groups, on November 8, the FASB ended its work with respect to proposed ASU No. 2015-310 and decided to revert back to the definition of materiality that had been applied under CON 2, Qualitative Characteristics of Accounting Information, which was in use until 2010.