At its meeting last week, the FASB discussed external review comments received on the following forthcoming Board proposals:

• Proposed amendments to Chapter 3, Qualitative Characteristics of Useful Financial Information, of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting (“Chapter 3 of Concepts Statement 8”).
• A proposed Accounting Standards Update (ASU) on ASC 235.¹

The Board decided to state in both its proposed amendments to Chapter 3 of Concepts Statement 8 and the proposed ASU that materiality is a legal concept. In addition, it decided to include in its proposed amendments to Chapter 3 of Concepts Statement 8 “[i]nformation on how a legal concept is established and may be changed (including references to legislative, executive, or judicial action)” and a “summary of the current definition of materiality.”

The Board directed its staff to draft both the proposed amendments to Chapter 3 of Concepts Statement 8 and the proposed ASU on ASC 235 for vote by written ballot, with a comment period of 75 days.

____________________

1 FASB Accounting Standards Codification Topic 235, Notes to Financial Statements.