nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2009‒09‒19
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The role of the IASB and auditing standards in the aftermath of the 2008/2009 Financial Crisis By Ojo, Marianne
  2. The distributional implications of income underreporting in Hungary By Benedek, Dora; Lelkes, Orsolya
  3. Bureaucracy and Corruption Taxation Proof By Jellal, Mohamed
  4. Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data By Richard Burkhauser; Shuaizhang Feng; Stephen Jenkins; Jeff Larrimore
  5. STRATEGIC costs management at societies group level. Multicriterial model for optimization By Pirvu, Cerasela; Mehedintu, Anca
  6. Behavioral Economics and Tax Policy By William Congdon; Jeffrey R. Kling; Sendhil Mullainathan
  7. Growth Accounting By Charles R. Hulten

  1. By: Ojo, Marianne
    Abstract: This paper considers areas in which the regulation and enforcement of accounting standards, and auditing standards in particular, have contributed to the recent global financial crisis. As well as the impact of such standards on pro cyclicality, the level of success achieved by international standard setters such as the Basel Committee for Banking Supervisors, relates to how effectively the accounting and audit standard setting is implemented. Collaboration between authorities such as CESR (Committee of European Securities Regulators), CEBS (Committee of European Banking Supervisors), and CEIOPS (Committee of European Insurance and Occupation Pensions Supervisors), as identified by the Report of the High Level Group on Financial Supervision in the EU, is also vital in determining how far the IASB is able to achieve its goals. As well as identifying the importance of convergence in contributing towards high quality audits and the consistent application of auditing and accounting standards, this paper also acknowledges the difficulties and challenges encountered in attempting to achieve a convergent framework. Furthermore, through a discussion of recommendations aimed at consolidating transparency and accounting, as proposed by the G20, ways in which accounting standards, and consequently the IASB, could contribute further to the improvement of transparency and accountability of the framework for fair value measurements and evaluation, are considered. However some factors still present sources of obstacles to the IASB’s attempts to realise the proposals put forward by the G20. This paper not only attempts to address such factors, but also to suggest ways in which the IASB, to an extent, could realise its goals. The IASB at present, has no enforcement mechanism. Enforcement actions are carried out at national level in various EU member states. Through a consideration of two enforcement regimes in Europe, namely, Germany and the UK, two related standards which govern enforcement in Europe, principles on which harmonisation of the institutional oversight systems in Europe may be achieved , and the vital contribution made by CESR and EFRAG (the European Financial Reporting Advisory Group), this paper will consider how enforcement could be implemented by the IASB at European level. Enforcement at European level is also important having regards to results of the peer review, which was carried out by CESR’s peer pressure group, the Review Panel, in July 2009.
    Keywords: regulation; auditors; standards; IASB; EFRAG; 2008/09 Financial Crisis
    JEL: K2 E0 G3 M4
    Date: 2009–09–07
  2. By: Benedek, Dora; Lelkes, Orsolya
    Abstract: The paper estimates the distributional implications of income tax evasion in Hungary based on a random sample of administrative tax records of 230 thousand individuals. Gross incomes in the administrative tax records are compared with those in a nationally representative household budget survey, assuming that tax-evaders are more likely to report their true incomes in an anonymous interview. Our estimates show that the average rate of underreporting is 11%, which conceals large differences between self-employed (who hide the majority of their incomes) and employees. The estimates are likely to be lower bound, due to measurement error in the income survey. These rates are then used in EUROMOD, a tax-benefit microsimulation model to calculate the fiscal and distributional implications of underreporting, while taking account of all major direct taxes and cash benefits and also their interactions. Tax evasion reduces fiscal revenues from personal income taxes by about 19%. While the occurrence of poverty is not affected, income inequality becomes significantly higher (the Gini coefficient increases by 7%), suggesting that high earners tend to evade proportionately more. Finally, we find that tax evasion largely reduces the progressivity of the tax system.
    Keywords: tax policy; tax evasion; income distribution; self-employed
    JEL: H22 D31 I38 C8 H26
    Date: 2009–09–09
  3. By: Jellal, Mohamed
    Abstract: Using the Principal-Agent-Supervisor paradigm, we examine in this paper how a tax collection agency changes optimal schemes in order to lessen the occurrence of bribery between the tax collector and the taxpayer. The Principal, who maximizes the expected net fiscal revenue, reacts by decreasing tax rates when the supervisor is likely to engage in corrupt transaction with taxpayer. The combat against collusion may explain the greater reliance on indirect taxes than on direct taxes both in developed and developing countries
    Keywords: Principal Agent Supervisor;Bureaucracy ;Collusion; Tax evasion
    JEL: D73 D82 H26
    Date: 2009–09–05
  4. By: Richard Burkhauser; Shuaizhang Feng; Stephen Jenkins; Jeff Larrimore
    Abstract: Although the vast majority of US research on trends in the inequality of family income is based on public-use March Current Population Survey (CPS) data, a new wave of research based on Internal Revenue Service (IRS) tax return data reports substantially higher levels of inequality and faster growing trends. We show that these apparently inconsistent estimates can largely be reconciled once one uses internal CPS data (which better captures the top of the income distribution than public-use CPS data) and defines the income distribution in the same way. Using internal CPS data for 1967–2006, we closely match the IRS data-based estimates of top income shares reported by Piketty and Saez (2003), with the exception of the share of the top 1 percent of the distribution during 1993–2000. Our results imply that, if inequality has increased substantially since 1993, the increase is confined to income changes for those in the top 1 percent of the distribution.
    Keywords: US Income Inequality, Top income shares, March CPS, IRS tax return data
    JEL: D31 C81
    Date: 2009–09
  5. By: Pirvu, Cerasela; Mehedintu, Anca
    Abstract: In our opinion, the performances at group level must be analyzed differently, depending on the adopted strategy. Thus, we consider that a major problem of the accounting and cost control is their compatibility with the strategy. This is justified by the fact that a certain system, that can be an efficient instrument for assessing the performances of a group whose strategy is cost dominated, could cause malfunctions in a company that adopts a differentiation strategy. Because groups’ management currently faces a specific problem – adopting decisions when several objectives are followed simultaneously or the same objective common for more branches – we consider that, in such cases, the decisions cannot be based on a classic model of optimization of a single objective function. We consider that an optimization model with several objective functions, which aims at optimizing the costs for the subsidiaries and choosing a satisfactory solution for the company, is necessary.
    Keywords: costs; the optimization of the costs; decision process; linear programming; games theory.
    JEL: M41 M10
    Date: 2009–09–08
  6. By: William Congdon; Jeffrey R. Kling; Sendhil Mullainathan
    Abstract: Behavioral economics is changing our understanding of how economic policy operates, including tax policy. In this paper, we consider some implications of behavioral economics for tax policy, such as how it changes our understanding of the welfare consequences of taxation, the relative desirability of using the tax system as a platform for policy implementation, and the role of taxes as an element of policy design. We do so by reviewing the logic of specific features of tax policy in light of recent findings in areas such as tax salience, program take-up, and fiscal stimulus.
    JEL: H2
    Date: 2009–09
  7. By: Charles R. Hulten
    Abstract: Incomes per capita have grown dramatically over the past two centuries, but the increase has been unevenly spread across time and across the world. Growth accounting is the principal quantitative tool for understanding this phenomenon, and for assessing the prospects for further increases in living standards. This paper sets out the general growth accounting model, with its methods and assumptions, and traces its evolution from a simple index-number technique that decomposes economic growth into capital-deepening and productivity components, to a more complex account of the growth process. In the more complex account, capital and productivity interact, both are endogenous, and quality change in inputs and output matters. New developments in micro-level productivity analysis are also reviewed, and the long-standing question of net versus gross output as the appropriate indicator of economic growth is addressed.
    JEL: E01 O47
    Date: 2009–09

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