Disclosure Framework—Entity’s Decision Process

FASB CONCEPTS STATEMENT NO. 8, CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING—CHAPTER 3, QUALITATIVE CHARACTERISTICS OF USEFUL FINANCIAL INFORMATION

 

Overview


On August 28, 2018, the FASB issued amendments to FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting—Chapter 3, Qualitative Characteristics of Useful Financial Information.  The amendments align the FASB’s definition of materiality with definitions and discussions of the U.S. Securities and Exchange Commission (SEC), auditing standards of both the Public Company Accounting Oversight Board (PCAOB) and the American Institute of Certified Public Accountants (AICPA), and the judicial system in the United States.
 

The Disclosure Framework Project


The disclosure framework project’s objective and primary focus are to improve the effectiveness of disclosures in notes to financial statements by facilitating clear communication of the information required by generally accepted accounting principles (GAAP) that is most important to users of each entity’s financial statements. The project sought to achieve that objective by:
  1. Developing a framework that promotes consistent decisions by the Board about disclosure requirements.  This was addressed by the Board’s decision process component of the project.
  2. Promoting the appropriate exercise of discretion by reporting entities.  This was addressed by the entity’s decision process component of the project. 
It was the work on the second component that led to the issuance of the amendments to FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting—Chapter 3, Qualitative Characteristics of Useful Financial Information.
 

Additional Information

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