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Article 12/05/2015

Materiality Proposals Promote Discretion in Footnote Disclosures & Offer Board Clarity

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Entities historically have leaned toward overdisclosing for many reasons, including fear of external auditor objections, litigation and compliance risks and the requirement to communicate omissions of immaterial disclosures as errors to audit committees. 

The Financial Accounting Standards Board (FASB) recently updated its overarching disclosure framework project, which is meant to improve the effectiveness of disclosures in notes to financial statements by clearly communicating the information most important to users of each entity’s financial statements. This paper summarizes actions FASB is taking to omit immaterial disclosures.

Materiality Proposals Promote Discretion in Footnote Disclosures & Offer Board Clarity