nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2009‒12‒19
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Informatics systems for financial audit and revision By Vătuiu , Teodora; Popeangă , Vasile Nicolae
  2. Firm-specific factors influencing the selection of accounting options provided by the IFRS: Empirical evidence from Spanish market By Juana Aledo; Fernando García-Martínez; Juan M. Marín Diazaraque
  3. Delhi’s VAT Department- Mixed Results and Lessons for GST By Garg, Rahul
  4. Can resource dependence and coercive isomorphism explain nonprofit organizations’ compliance with reporting standards? By S. VERBRUGGEN; J. CHRISTIAENS; K. MILIS
  5. Proposals for a new audit liability regime in Europe By Ojo, Marianne
  6. Transfer Pricing Risk Awareness of Multinational Corporations: Evidence from a Global Survey By Jost, Sven P.
  7. Lending a Hand: How Federal Tax Policy Could Help Get More Cash to More Charities By A. Abigail Payne
  8. Tax morale and public spending inefficiency By Guglielmo Barone; Sauro Mocetti
  9. Disclosure requirements, the release of new information and market efficiency: new insights from agent-based models By Hermsen, Oliver; Witte, Björn-Christopher; Westerhoff, Frank

  1. By: Vătuiu , Teodora; Popeangă , Vasile Nicolae
    Abstract: The activity of the financial auditors is regulated by International Standards of Revision for financial situations and information, through which the fundamental procedures and principles for this kind of missions are established. CIEL Audit and Revision application has been conceived as a support for financial auditors and expert accountants in Romania, offering help in the domain of informatics for the audit and accounting revision activities, since it is adapted both to the legal requirements and to the needs of professionals, covering the whole range of financial audit.
    Keywords: informatics systems; financial audit; revision
    JEL: C88 G0
    Date: 2009–03–01
  2. By: Juana Aledo (Universidad Complutense de Madrid); Fernando García-Martínez (Universidad Complutense de Madrid); Juan M. Marín Diazaraque (Universidad Carlos III de Madrid)
    Abstract: It is generally accepted that International Financial Reporting Standards (IFRS) promote a "true and fair" presentation of financial statements. The improvement of the quality of financial reporting helps investors, bankers and regulators make better decisions. Spanish GAAP, on the other hand, are based on a "prudent" approach for asset and liability recognition and valuation, with the goal of protecting stakeholders. Adjustments introduced as a consequence of IFRS adoption may result in (i) the recognition (or derecognition) of assets and liabilities for the first time (i.e. derivative financial assets and liabilities) and (ii) the application of accounting criteria that differs from those recognised under local GAAP (i.e. cost vs. revaluation model). The main objective of this study is to examine the financial statements of the firms listed on the Spanish Continuous Stock Market that have been using IFRS since 2005 to determine the accounting policy options they apply under IFRS and, most importantly, to provide evidence of the factors driving these choices. Since there are significant differences in reporting quality between countries as a consequence of different accounting regimes and institutional frameworks, mandatory IFRS adoption provides an opportunity to assess the economic consequences of these differences. The main finding of this paper is that companies apply the most conservative criteria to reduce the number of discrepancies between the two standards, particularly in regards to presentation and measurement practices. Nevertheless, the evitación from Spanish GAAP has a significant impact on reported equity and net income. Firms in Consumer services, Consumer goods, Oil and Gas, and Basic Materials, Manufacturing and Construction industries experience the largest adjustments. Additionally, we find that firm-specific factors such as industry, size, auditor’s opinion and capital structure influence the choice of accounting policy used to prepare financial statements. The findings reported in this paper provide a basis for debate about the quality of financial disclosure and reporting regulation and their impact across countries.
    Keywords: International Financial Reporting Standards, Mandatory Disclosure Level, Fair-value Accounting
    JEL: M41
    Date: 2009–12
  3. By: Garg, Rahul
    Abstract: The Value Added Tax (VAT) system is a system of indirect taxation that replaced the previous sales tax regime in India. Like its predecessor, VAT is implemented at the state level and applies to all goods traded within the state. The Delhi Value Added Tax Act was passed on 2004 and there were follow-up Rules in 2005. The new consumption tax system was finally put in force from 1 April 2005 in Delhi, along with 20 other states. Delhi VAT Act replaces the old Delhi Sales Tax Act, Delhi Sales Tax on Works Contract Act, Delhi Sales Tax on Right to use goods Act and Delhi Sales Tax on entry of motor vehicles. The Department of Trade and Taxes is the state department in charge of all matters related to VAT administration.
    Keywords: VAT; GST; Delhi; India
    JEL: K34 H2
    Date: 2009
    Abstract: Nonprofit organizations worldwide are confronted with an increasing demand for accountability and improved financial transparency. Financial reporting by nonprofit organizations is no longer an exception, it has become a rule. The usefulness of a financial report to an organization’s stakeholders depends upon its quality. The latter is safeguarded by reporting standards as well as the commitment of the organization to fully implement these standards. Although resource dependence and coercive isomorphism have been used in earlier nonprofit organization research, no empirical research has linked these theories to compliance with financial reporting standards.<br><br>Using a unique setting in which a large number of (very) large Belgian nonprofit organizations are confronted with far-reaching changes in financial reporting regulations, the effect of resource dependence and coercive isomorphism on accounting and financial reporting compliance is documented.
    Date: 2009–10
  5. By: Ojo, Marianne
    Abstract: The past few years have seen a growing trend towards the focus on audit liability. In the UK, the Company Law Reform Bill which became the Companies Act 2006, has removed the previously existing limits on auditor liability and compelled an agreement between the company and the auditor. As well as the UK, audit liability caps also currently exist in Austria, Belgium, Germany, Greece and Slovenia. This paper addresses the four options presented by the European Commission in the reform of the audit liability regime in Europe. It also responds to the proposals put forward by Doralt and others in their response to the European Commission’s four options. The paper commences with a background to how increased audit concentration has contributed to increased audit liability measures. It then discusses the significance of the Companies Act 2006, following the leading case of Caparo Industries plc v Dickman and Others. The four options presented by the European Commission for reforming auditors’ liability regime are then introduced. In arriving at a preferred choice, the need for a consideration of harmonisation and facilitating greater cooperation between national financial regulators, were contributory factors.
    Keywords: audit; liability; financial; regulation
    JEL: L5 K2 M42 M4
    Date: 2009–07
  6. By: Jost, Sven P. (Department of Economics and Statistics, University of Innsbruck)
    Abstract: This paper investigates the transfer pricing risk awareness of multinational firms using cross-sectional data of more than 350 firms located in 24 countries and classified in 12 industries. Moving beyond the sole tax optimization motives of multinational firms, we extend the existing literature by using unique firm-level information such as that the transfer pricing risk awareness is assessed and reported by the person ultimately responsible for transfer pricing. We find that the level of transfer pricing risk awareness of multinational companies predominantly depends on (i) the industry a firm operates in, (ii) a country’s risk classification with respect to its transfer pricing regulations (e.g., penalty regimes in case of non-compliance with transfer pricing regulations), (iii) firm size and (iv) the interaction effect of the first two factors. By way of contrast, the time of introduction of transfer pricing regulations and also tax considerations do not seem to play a crucial role for transfer pricing risk perceptions.
    Keywords: Transfer pricing; International taxation; Multinational firms; Tax risk management
    JEL: F23 H25
    Date: 2009–12–07
  7. By: A. Abigail Payne (McMaster)
    Abstract: Although total giving to charities in Canada has increased in the last two decades, the share of tax filers reporting cash donations has fallen, and the sector’s reliance on large donations by wealthy donors has risen. To broaden the donation base, the author suggests creating a single tax-credit rate for cash donations or an RRSP-like charitable gift plan.
    Keywords: charities papers, federal tax policy, Canadian charities
    JEL: H20 D64
    Date: 2009–11
  8. By: Guglielmo Barone (Bank of Italy); Sauro Mocetti (Bank of Italy)
    Abstract: Tax evasion is a widespread phenomenon and encouraging tax compliance is an important and much debated policy issue. Many studies have shown that tax cheating has to be attributed to a considerable extent to the tax morale of taxpayers. The aim of the present paper is to shed light on the relationship between the taxpayer and the public sector. Specifically, we investigate whether public spending inefficiency shapes individual tax morale. Combining data from Italian municipalities’ balance sheets with individual data from a properly designed survey on tax morale, we find that the attitude towards paying taxes is better when resources are spent more efficiently. This does not appear to be due to some confounding factors at the municipality level or to spatial sorting of citizens. It is also robust to alternative measures of both inefficiency and tax morale.
    Keywords: tax morale, public spending inefficiency
    JEL: D24 H11 H26 H72
    Date: 2009–11
  9. By: Hermsen, Oliver; Witte, Björn-Christopher; Westerhoff, Frank
    Abstract: We explore how disclosure requirements that regulate the release of new information may affect the dynamics of financial markets. Our analysis is based on three agentbased financial market models that are able to produce realistic financial market dynamics. We discover that the average deviation between market prices and fundamental values increases if new information is released with a delay, while the average price volatility is virtually unaffected by such regulations. Interestingly, the tails of the distribution of returns become fatter if fundamental data is released less continuously, indicating an increase in financial market risk. --
    Keywords: Agent-based financial market models,market efficiency,release of new information,disclosure requirements,regulation of financial markets,Monte Carlo analysis
    JEL: G14 G18
    Date: 2009

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