nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2010‒01‒30
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Evolving Connections Between Tax and Financial Reporting in Italy By Giovanna Gavana; Gabriele Guggiola; Anna Marenzi
  2. IFRS Adoption in the E.U., accounting harmonization and market efficiency: a review By Gabriele Guggiola
  3. The Need for a Different Approach to Financial Reporting and Standard-setting By Östman, Lars
  4. The 2008 Financial Crisis and Taxation Policy By Thomas Hemmelgarn; Gaëtan Nicodème
  5. Endogenous Choice on Tax Instruments in a Tax Competition Model: Unit Tax versus Ad Valorem Tax By Nobuo Akai; Hikaru Ogawa; Yoshitomo Ogawa
  6. Audit, tax compliance and undeclared work: an empirical analysis By Edoardo Di Porto
  7. The General Data Dissemination System (GDDS)-A Reflection on its First 12 Years and Plans for Taking it Forward By Charles Enoch; Robin D. Kibuka

  1. By: Giovanna Gavana (Department of Economics, University of Insubria, Italy); Gabriele Guggiola (Department of Economics, University of Insubria, Italy); Anna Marenzi (Department of Economics, University of Insubria, Italy)
    Abstract: This paper analyzes the evolution of the relationship between tax and financial reporting in Italy after the mandatory introduction of IFRS for listed companies in 2005. In order to assess this link we will use the methodology developed by Lamb et al. (1998). Italy represents an interesting case study because IFRS have become mandatory, for listed companies, also for what concerns individual, and fiscally relevant, accounts. Therefore, two accounting systems, one based on IFRS and one based on Italian Gaap coexist, originating the emergence of two rather different linkages between tax and financial reporting. IFRS and tax reporting exhibit an high degree of disconnection, while Italian Gaap, according to a continental European accounting tradition, are heavily linked to fiscal rules. The analysis will point out a rapidly evolving situation, with links between both accounting systems (IFRS and Italian Gaap) and tax reporting getting tighter as a consequence of last years tax reforms. JEL Classification: H20, M41
    Keywords: Taxation, Accounting, International Financial Reporting Standards (IFRS)
    Date: 2010–01
  2. By: Gabriele Guggiola (Department of Economics, University of Insubria, Italy)
    Abstract: As of 1st January 2005 all European listed companies had to adopt IAS/IFRS in order to prepare their consolidated financial statements. Five years later, the paper analyses the advancements in the accounting harmonisation process within European countries and between E.U. and the rest of the world, overviewing the first available evidences on financial market efficiency. The paper has three main objectives. It aims at providing a state-of-the-art of the process of IFRS adoption in the E.U. pointing out the positive observable effects and the main drawbacks and at reviewing the existent literature developed during the last years on this subject. Finally, it aims at identifying some interesting and so far not explored research areas. JEL Classification: M41
    Keywords: International Financial Accounting Standards; European Union;International accounting Harmonization; Convergence
    Date: 2010–01
  3. By: Östman, Lars (Dept. of Business Administration, Stockholm School of Economics)
    Abstract: International Financial Reporting Standards are questioned. Possibly, there is a need for a different kind of standards and a different procedure for developing them. No doubt, there is a need for a more profound theoretical approach to these issues. Theory-building in accounting should include approaches whereby problem descriptions have a broad coverage and cross the boarders of traditional specialisations. In this paper, a theoretical approach is outlined. According to this approach, insights into control problems for every organisation and system can be gained by analysing relationships between global value chains and a hierarchy of one or several organisations. Time is crucial. Instrumentality is regarded as an inevitable and necessary guide line for any control system that relates resources to functions and visions. Instrumentality concerns the effects of tools on certain functions. In the paper financial reporting and standard-setting are placed in a wide context in which longitudinal relationships are essential for individuals, organisations and control systems. Basic financial accounting concepts and their relationships with business events are discussed. The importance of uncertainty for financial reporting is emphasized, and so is the fact, that control from top-levels is exercised at a distance. A tendency to instrumentalism is also recognized: measures and procedures, for example standard setting procedures, tend to be important in themselves, irrespective of ultimate economic functions in a wider perspective. The analysis in the paper is one application of a general approach to financial control for all types of organisations. The general approach is based on a number of previous research-oriented books published over several decades and the author´s specific own experiences from internal and external processes with organisations in focus. Consistency and integrative power of the ideas have been tested in relation to certain books in various fields outside the core of the subject: applied systems theory, theatre, sociology, economic history, institutional theory and economics.
    Keywords: financial reporting; International Financial Reporting Standards; standard-setting; accounting standard setting bodies; supervisory boards; corporate governance; transparency; market value accounting; mark-to-market; fair values; historical values; accounting theory.
    Date: 2010–01–19
  4. By: Thomas Hemmelgarn (European Commission.); Gaëtan Nicodème (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, ECARES, Université Libre de Bruxelles, Brussels, European Commission, CEPR and CESifo.)
    Abstract: The 2008 financial crisis is the worst economic crisis since the Great Depression of 1929. It has been characterised by a housing bubble in a context of rapid credit expansion, high risk-taking and exacerbated financial leverage, leading to deleveraging and credit crunch when the bubble burst. This paper discusses the interactions between tax policy and the financial crisis. In particular, it reviews the existing evidence on the links between taxes and many characteristics of the crisis. Finally, it examines some possible future tax options to prevent such crises.
    Keywords: financial crisis, tax policy, taxation, fiscal stimulus, financial transaction tax, property tax.
    JEL: E62 F21 F30 G10 H20 H30 H50 H60
    Date: 2010–01
  5. By: Nobuo Akai (Osaka School of International Public Policy, Osaka University); Hikaru Ogawa (School of Economics, Nagoya University); Yoshitomo Ogawa (Faculty of Economics, Kinki University)
    Abstract: This paper analyzes an endogenous choice problem with regard to tax instruments in a capital tax competition model. Considering a symmetric and two-region model of tax competition, where each region is allowed to choose either unit or ad valorem tax, we show that selecting unit tax as a policy instrument is the dominant strategy of governments. An interpretation of this result is clearly explained by the properties of the best response curves.
    Keywords: Tax competition, Unit tax, Ad valorem tax
    JEL: H20 H21 H77
    Date: 2010–01
  6. By: Edoardo Di Porto
    Abstract: To encourage tax compliance towards the Italian tax contributive system, the Italian Social Security Institute (INPS) develops a number of audits intothe Italian firms. The aim of these inspections is to detect possible evasions and to threaten cheating enterpreneurs with penalties, if necessary. In our case "to cheat" means to hide a part of the labor forces to the authority, underdeclaring their real dimensions and thus to evade a certain amount of social-insurance taxes. In this paper we particularly focus on showing how it is possible to use individual audit data to better understand the relation between inspections and tax compliance, and consequently the relation between the policy of auditing and undeclared work. A new source of data was built for this purpose, merging information about firms with individual audit data. Our analysis is developed as follow: after a brief introduction, we describe the dataset and we give some details on the procedures used by inspectors. Then we show a simple model of auditing in order to enlighten relation between audit policy and work force declaration. The second part of the analisys, mainly empirical, attempts to explain how to estimate undeclared work starting from our new source of data, after that, we assess two microeconometric policy evaluation analysis. Our aim is to nderstand the relation that lies between the policy of auditing and a) the propensity to declare workers; b) the number of black workers implied in the labour market.
    Keywords: Audit, undeclared work, sample selection, microdata.
    JEL: C33 C34 H26 J45 O17
    Date: 2009
  7. By: Charles Enoch; Robin D. Kibuka
    Abstract: The paper reviews the developments in the last 12 years that have influenced the evolution of the IMF's General Data Dissemination System, leading to reforms to enhance its role. The GDDS itself is part of a broader IMF Data Standards Initiative launched in 1996 to help address macroeconomic data deficiencies, which contributed to the emerging economies' financial crisis during the early 1990s. The review takes stock of the experience with statistical technical assistance provided to member countries and the ongoing reforms, within and outside the IMF, to strengthen the GDDS. Such reforms are particularly relevant in the context of the ongoing economic and financial crisis, which once again underscores the role of statistics in guiding policymakers to strengthen defenses against future crises.
    Keywords: Access to capital markets , Data quality assessment framework , Emerging markets , Financial crisis , Fund role , General Data Dissemination System , Special Data Dissemination Standard , Standards and codes , Statistics , Technical assistance ,
    Date: 2009–12–18

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