Determining what should be considered a material item has been a problem for both the accounting profession and the courts. By reviewing the court cases involving the issue of materiality, the authors have determined where differences in the materiality standard as applied by the courts exist. The judicial definition of materiality has developed over time, and current trends with important variations are observed. Based upon the authors' analysis, the following judicial definition of materiality, with its possible variations, is suggested: Would the reasonable (or speculative) investor (or layman) consider important (or be influenced by) this information in determining his course of action?
Bean, LuAnn and Thomas, Deborah W.
"Development of the judicial definition of materiality,"
Accounting Historians Journal: Vol. 17
, Article 7.
Available at: https://egrove.olemiss.edu/aah_journal/vol17/iss2/7