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FASB Realigns Materiality Standard with a Little Help from the SEC
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FASB Realigns Materiality Standard with a Little Help from the SEC

12.05.17

On November 10, 2017, in response to the SEC’s Office of the Investor Advocate July 11, 2017 letter, the Financial Accounting Standard Board (FASB) ended work on its controversial proposal to redefine “materiality” as it is applied to U.S. GAAP. Instead, the FASB returned to the materiality standard set forth in the FASB’s Concepts Statement (CON) No. 2, Qualitative Characteristics of Accounting Information, which defines materiality in the context of “the magnitude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement.” The FASB’s board stated their definition was consistent with the definition used by the SEC, as well as key accounting oversight bodies such as the Public Company Accounting Oversight Board, and the American Institute of Certified Public Accountants.



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