I don't quite remember when I first learned about the concept of materiality, but my hunch is that it was in the first accounting class I ever took, which was in high school. That suggests, to me anyway, that the concept of materiality is elementary to accounting. That is, you know a debit from a credit, can use the bathroom all by yourself, etc.
Which is why I can hardly believe FASB member Marc Siegel's statement in Gretchen Morgenson's column:
Marc Siegel, a FASB member, said the board had not expected to receive the blistering criticism from investors that it did on the proposal.
“We were surprised by the feedback,” Mr. Siegel said in an interview conducted in late 2015. “When it generated a lot of controversy, we committed to slow down, take in this feedback and do a round table on it, probably sometime in the second quarter of next year.”
You know things they are finally getting serious when a round table get mentioned.
But honestly, it's a little strange that FASB didn't expect people to get bent out of shape when they proposed to change "a mainstay of corporate financial disclosure." They may as well suggested swapping debits and credits.
"Guys, don't you think credits should be on the left side? I mean, C comes before D in the alphabet. Really, this the way it should've been done in the first place."
"Fine then, let's put out for proposal."
Adding to the FASBpasticness is the feeling that this proposal came out of left field:
Some investors questioned why FASB decided to move on this issue at all. “It’s not apparent that there was a need to do this,” said Jack T. Ciesielski, publisher of The Analyst’s Accounting Observer and a critic of the FASB proposal. “I think it’s what the corporate side wants.”
In materials describing how its proposal came about, FASB suggested that it was intended to improve the effectiveness of financial statements by reducing the amount of immaterial information in them. FASB also said that with the proposal, it was “trying to promote the use of discretion” by those preparing financial statements.
Ciesielski doesn't buy that argument:
[F]ew investors seem to agree that financial filings today contain a flood of irrelevant information. In a report, Mr. Ciesielski called disclosure overload a “paper bogeyman” and a myth.
He added in an interview, “The S.E.C. and FASB always talk about redundant disclosures, but really there are very few.”
FASB's proposal suggests that the issuers know better than investors what constitutes important information. Most investors would prefer to decide for themselves what's important. The opposing forces seem destined for a steel cage death match. Which is a lot more serious than a round table. But also more fun! Here's hoping this gets ugly.