In its quest to improve financial statement disclosures, the Financial Accounting Standards Board is taking a crack at better defining materiality -- or at least assuring any existing guidance doesn’t conflict with other legal concepts of materiality.

FASB has issued for public comment two exposure drafts to address the application of the concept of materiality in disclosures. The board developed both proposals as it pursues a larger effort to improve its own guidance and guidance to companies around disclosures.

One exposure draft is a proposed update to Accounting Standards Codification Topic 235 that is meant to help organizations use discretion when deciding which footnote disclosures should be considered material. FASB says it hears often that certain required disclosures may be relevant to some organizations, but not all, so the guidance is meant to help companies shed immaterial disclosures. Another exposure draft is a proposed amendment to FASB’s conceptual framework, specifically Concept Statement No. 8 on financial reporting, that is intended to clarify the concept of materiality for standard-setting purposes.

Materiality is not defined by U.S. Generally Accepted Accounting Principles or even reporting rules under the Securities and Exchange Commission. However, case law has established a definition that seems at odds with current accounting guidance, according to FASB Chairman Russ Golden.

“Stakeholders indicated that the current discussion of materiality in our conceptual framework is inconsistent with the legal concept of materiality as established by the U.S. Supreme Court,” said Golden in a statement. “This led to uncertainty about organizations’ abilities to interpret what disclosures are material, and the board’s ability to identify and evaluate disclosure requirements in accounting standards.”

The proposals are intended to clarify materiality under U.S. GAAP to help organizations improve the effectiveness of their disclosures by steering them away from immaterial information, Golden said. That would help focus communication on material, relevant issues.

In the conceptual framework, FASB is proposing what it believes to be the simplest and most effective way to end any confusion. The proposed amendments would say FASB does not define materiality and would replace existing discussion with a broad observation of the U.S. Supreme Court’s definition of materiality.

The proposed update to accounting standards would say that materiality is applied to quantitative and qualitative disclosures individually and in the aggregate in the context of the financial statements taken as a whole. It would add that some but not all requirements in a disclosure may be material, and that the omission of immaterial information does not constitute an accounting error.

Both exposure drafts are open for public comment through Dec. 8.