At a meeting in January, the American Institute of Certified Public Accountants’ (“AICPA”) Auditing Standards Board (“ASB”) agreed to align its “materiality” definition with the definitions used by the Financial Accounting Standards Board (“FASB”), Securities and Exchange Commission (“SEC”), and Public Company Accounting Oversight Board (“PCAOB”). The narrow project aims to remove inconsistencies in the definition among AICPA Professional Standards and the Supreme Court, SEC, FASB, and the PCAOB.
The effort comes after the FASB’s decision last year to revert to its original “materiality” definition from 1980 to 2010. The FASB revised its definition to align its concept of materiality to determine what information should be included and omitted from a financial statement used by the SEC, PCAOB, and the U.S. judicial system under Concepts Statement No. 8, Conceptual Framework for Financial Reporting: Notes to the Financial Statements.
The ASB’s definition of materiality is similar to the International Accounting Standards Board definition, but the board now believes it is more appropriate to be consistent with U.S. standard setters than international standard-setters.
A board discussion on the draft document for the project is scheduled for Friday, March 8.