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4 The Principle of " Materiality" an d Its Criticism In Chapte r 3 , ''Syste m o f th e Principle s o f Regula r Accounting/ ' under th e heading "Materiality, " Ulric h Leffso n write s a s follows : "From th e ide a o f accountability , t o giv e informatio n t o thos e entitled t o i t a s a basi s fo r thei r decisions , on e ca n deriv e th e principle tha t i s establishe d a s th e principl e o f 'materiality ' i n American balanc e shee t discussion s an d i s best calle d 'Prinzi p de r Wesentlichkeit' i n German." * In explainin g thi s matter , h e quote s fro m a n articl e b y S . M . Woolsey, "Objectiv e Bas e fo r Makin g Materialit y Decisions, " i n the bulleti n The Accountant, whic h i s issue d b y th e Institut e o f Chartered Accountant s i n Englan d an d Wale s (th e I.C.A.) : "An y item i n betwee n th e tw o limit s coul d b e considere d materia l o r immaterial, dependin g upo n th e surroundin g circumstances . A n accountant woul d b e expecte d t o follo w th e recommende d guide lines unless h e could justify departur e fro m them. " H e also quote s the followin g fro m Jame s L . Dohr' s articl e "Materiality—Wha t Does It Mean i n Accounting?," which wa s published i n the Journal of Accountancy (th e bulletin o f the AICPA): A statement, fact , o r ite m i s material, i f giving full consideratio n t o th e surrounding circumstances, as they exist at the time, it is of such a nature that it s disclosure, or th e metho d o f treating it , would b e likely to influ ence or to "make a difference" i n the judgment an d conduct of a reasonable person . Th e sam e test s als o appl y t o suc h word s a s "significant, " "consequential," or "important. 2 36 The Principle of "Materiality'' an d It s Criticism 3 7 Originally, thi s principl e wa s include d i n th e concep t o f th e principles o f regular bookkeepin g i n Germany. It i s worth notin g that in the principle of "materiality/' there is a difference betwee n "quantitative materiality " an d "qualitativ e materiality. " Fo r in stance , whe n th e possibilit y exist s o f th e omissio n o f mentione d items, it is regarded tha t ther e is a "material thing." 3 To the best of my knowledge th e concep t o f "materiality" originate d i n Articles 1 1 and 2 4 of the U.S . Securities Ac t of 1933 . Like the princi ples of regular bookkeepin g i n th e Federa l Republi c o f Germany , the concept of "materiality" i s not a fixed one, but i t evolves over time. Moreover, although it may seem a trivial thing, I wish to correct one thing from th e viewpoint o f the pursuit of truth. In the "Post script by the Editor" (pp . 192-93) of the September 197 9 issue of Accounting, whic h was compiled by the Japan Societ y of Accounting and published b y Moriyama Shoten , there is a critical articl e by Dr . Kurosawa , "Th e Principle s o f Regula r Bookkeeping. " Dr . Kurosawa i s the most renowne d accountin g scholar in Japan an d a "nationa l treasure. " He has bee n recognize d a s suc h b y all . To criticize hi s articl e embarrasse s m e an d prompt s m e t o expres s my deep regrets to him. We who liv e i n thi s time , however, an d hav e bee n brough t u p in an Eastern culture have to consider the teachings of Mencius in China wh o preache d tw o thousan d year s ag o tha t "i f on e give s one's credi t t o all th...

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