The U.S. Accounting Standards Codification uses the term "material" but does not contain a definition or guidance on applying the term. The proposed ASU would insert a statement that "materiality" is a legal concept (i.e., the concept defined by the U.S. legal system). The proposal would also add a statement that materiality applies to quantitative and qualitative disclosures in the notes to the financial statements “individually and in the aggregate in the context of the financial statements as a whole” and that “some, all, or none of the requirements in a disclosure Section may be material.” It would also add a statement that omitting “disclosures about immaterial information is not an accounting error.”

The discussion of materiality in the IASB and FASB conceptual frameworks was aligned in 2010 as part of a joint effort by the two boards. The IASB and the FASB have now both taken unilateral steps to amend the converged definition of materiality in their frameworks. In May this year the IASB proposed a minor wording change to the description of materiality in the Conceptual Framework, by narrowing the focus to the 'primary' users of general purpose financial reports. The IASB is also considering amending the definition of materiality in IAS 1 Presentation of Financial Statements as part of its Disclosure Initiative. Those proposals would, as a first step, be included in the Principles of Disclosure Discussion Paper which the IASB says will be published in 2016. In addition, the IASB plans to issue an exposure draft of a proposed practice statement on the subject of materiality in October 2015.

For more information, see Deloitte's related Heads Up newsletter as well as the press release and FASB in Focus newsletter on the FASB’s website.