23 September 2021 - Article
In 2015 FASB issued two exposure drafts clarifying the definition of “materiality” to reflect the Supreme Court's rulings in TSC Industries v. Northway and Basic v. Levinson. The clarified definition read generally, “Information is material if there is a substantial likelihood that the omitted or misstated item would have been viewed by a reasonable resource provider as having significantly altered the total mix of information.” The clarified definition received wide backlash because of the definitions suggestion that only legal professionals can make materiality judgments. Commenters to the definition believed that materiality should be considered an accounting concept. Resulting from the criticism of commenters, FASB has re-amended the definition returning it to its 1999 Staff Accounting Bulletin No. 99 definition. For more information see https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176171111614&acceptedDisclaimer=true
This article was written by Tim Piscatelli.