nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒05‒04
four papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Audit Committees in Central Banks By Marie-Thérèse Camilleri Gilson; Tonny Lybek; Kenneth Sullivan
  2. British Influence on Commonwealth Budget Systems: The Case of the United Republic of Tanzania By Ian Lienert
  3. Is the Value Added Tax Reform in India Poverty-Improving? An Analysis of Data from Two Major States By Ajitava Raychaudhuri; Sudip Kumar Sinha; Poulomi Roy
  4. A Theory of "Crying Wolf": The Economics of Money Laundering Enforcement By Elod Takats

  1. By: Marie-Thérèse Camilleri Gilson; Tonny Lybek; Kenneth Sullivan
    Abstract: This paper reviews the tasks and design of audit committees, increasingly recommended as a way to strengthen financial accountability and good central bank governance. It outlines the motivations for the establishment of audit committees in commercial corporations and public sector entities, and explains how audit committees interact with other governance bodies within a central bank. The paper focuses on the functions of an audit committee, since the terminology of the governance structure is often country-specific. It summarizes operational issues to consider in designing an effective audit committee and discusses the implications for central bank legislation.
    Keywords: Central Bank governance , audit committees ,
    Date: 2007–04–03
  2. By: Ian Lienert
    Abstract: Several features of Tanzania's budget system find their roots in the arrangements inherited from the United Kingdom. These include a legal framework that emphasizes accountability; a cabinet of ministers with strong budget decision-making powers; a parliament with very limited budget powers; and a similar external audit organization. In both countries, budget execution is decentralized to individual ministries, with accounting officers responsible to a parliamentary accounts committee. These similarities are blended with contrasts, including in Tanzania: a presidential system of government, one dominant political party, a written constitution, and some fragmentation in central budget decision-making within the executive.
    Keywords: Budget , legislature , executive , constitution , law , Minister of Finance , Chancellor , Exchequer , Permanent Secretary , Accounting Officer ,
    Date: 2007–04–05
  3. By: Ajitava Raychaudhuri; Sudip Kumar Sinha; Poulomi Roy
    Abstract: The Value Added Tax (VAT) was introduced in India in place of Sales Tax, taking effect in April 1, 2005. These taxes are in the domain of different state governments within the country's federal set up. Although VAT is widely acclaimed to be a better system than the sales tax on grounds of efficiency in tax collection, no study has been undertaken to assess the impact of this reform measure on social equity. This paper addresses this need with the use of concentration curves and consumption dominance curves of various orders. The simulations were done on two major states in India, namely Maharashtra and West Bengal, using National Sample Survey Unit Level data for the 55th round. The results show that the reform is largely pro-poor, although there are ways to improve it with respect to some items predominantly consumed by the relatively poorer groups.
    Keywords: Value added tax, Marginal tax reform, public distribution system, concentration curve, Lorenz curve, marginal efficiency cost of funds, consumption dominance
    JEL: D12 D63 H21 H22 H71 I32
    Date: 2007
  4. By: Elod Takats
    Abstract: The paper shows how excessive reporting, called "crying wolf", can dilute the information value of reports. Excessive reporting is investigated by undertaking the first formal analysis of money laundering enforcement. Banks monitor transactions and report suspicious activity to government agencies, which use these reports to identify investigation targets. Banks face fines should they fail to report money laundering. However, excessive fines force banks to report transactions which are less suspicious. The empirical evidence is shown to be consistent with the model's predictions. The model is used to suggest implementable corrective policy measures, such as decreasing fines and introducing reporting fees.
    Keywords: Money laundering , USA Patriot Act , disclosure , auditing ,
    Date: 2007–04–05

This nep-acc issue is ©2007 by Alexander Harin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.