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on Accounting and Auditing |
| By: | Ojo, Marianne |
| Abstract: | The primary argument of this paper is, namely, that the International Accounting Standards Board (IASB), is in need of an enforcement mechanism. In drawing attention to this argument, the paper not only proposes considerations which are to be taken into account if such a mechanism is to be implemented, but also considers areas in which the regulation of accounting standards, and auditing standards in particular, have contributed to the recent global financial crisis. The impact of such standards on pro cyclicality, the level of success achieved by the IASB and other international standard setters such as the Basel Committee on Banking Supervision, relates to how effectively the accounting and audit standard setting is implemented. 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. The absence of enforcement mechanisms, the fact that enforcement actions are carried out at national level in various EU member states, present sources of obstacles to 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. 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. |
| Keywords: | Audit; FASB; IASB; regulation; Financial Crisis; standards |
| JEL: | K2 G2 G3 M4 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20330&r=acc |
| By: | Jost, Sven P. (Department of Economics and Statistics, University of Innsbruck); Pfaffermayr, Michael (Department of Economics and Statistics, University of Innsbruck); Winner, Hannes (University of Salzburg) |
| Abstract: | This paper contributes to the empirical literature on the transfer pricing behavior of multinational firms. Previous research mainly focuses on transfer pricing as a means of tax optimization. Our approach concentrates on transfer pricing as a critical compliance issue. Specifically, we investigate whether and to what extent the awareness of transfer pricing as a tax compliance issue responds to country and industry characteristics as well as firm-specifics. Empirically, the transfer pricing risk awareness is measured as a professional assessment reported by the person with ultimate responsibility for transfer pricing in their company. Based on a unique global survey conducted by a Big 4 accounting firm in 2007 and 2008, we estimate the number of firms reporting transfer pricing being the largest risk issue with regard to subsequent tax payments. We find that transfer pricing risk awareness depends on variables accounting for general tax and transfer pricing specific strategies, the types and characteristics of intercompany transactions the multinational firms are involved in, their individual transfer pricing compliance efforts and resources dedicated to transfer pricing matters. |
| Keywords: | Transfer pricing; international taxation; multinational firms; tax risk management |
| JEL: | F23 H25 |
| Date: | 2010–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sbgwpe:2010_006&r=acc |
| By: | Biørn, Erik (Dept. of Economics, University of Oslo) |
| Abstract: | The appropriate way of quantifying how taxation of a firm's income and capital can distort its optimizing conditions is a recurring issue in the literature on optimal taxation. Exponential decay, although empirically contested, is almost ubiquitous. In the present paper a generalized framework which allows for a general, non-exponential, decay pattern for both true and tax-permitted depreciation, is considered. Both convex and concave survival functions can be accommodated. Three capital concepts are involved, two of which coincide under exponential decay. The trade-off between various departures from neutrality is illustrated. Elements which contribute to non-neutrality are: (i) discrepancy between the defnition of the tax-relevant accounting capital and true depreciation, (ii) mis-indexation of depreciation allowances, (iii) incomplete deductibility of interest costs, (iv) asymmetric treatment of interest costs and capital gains, and (v) taxation of the value of the capital stock. Finally, we show that substantial biases can arise in assessing the degree of non-neutrality if non-exponential depreciation schedules are forced, by `approximation devices', to ft into the exponential decay schedule. |
| Keywords: | Capital taxation; Taxable income; Tax-neutrality; Tax distortion; Survival func- tion; Capital service price; Non-exponential decay; Depreciation; Indexation |
| JEL: | D61 E22 H21 H25 |
| Date: | 2009–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2009_027&r=acc |
| By: | Dischinger, Matthias; Riedel, Nadine |
| Abstract: | This paper stresses the special role of multinational headquarters in corporate profit shifting strategies. Using a large panel of European firms, we show that multinational enterprises (MNEs) are reluctant to shift profits away from their headquarters even if these are located in high-tax countries. Thus, shifting activities in response to corporate tax rate differentials between parents and subsidiaries are found to be significantly larger if the parent observes a lower corporate tax rate than its subsidiary and profit is thus shifted towards the headquarters firm. This result is in line with recent empirical evidence suggesting that MNEs bias the location of profits and highly profitable assets in favor of the headquarters location (for agency cost reasons among others). |
| Keywords: | multinational firm; profit shifting; headquarters location |
| JEL: | H25 H26 C33 |
| Date: | 2010–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:11352&r=acc |
| By: | Metin M. Cosgel (University of Connecticut); Haggay Etkes (Bank of Israel); Thomas J. Miceli (University of Connecticut) |
| Abstract: | This paper contributes to the literature on private law enforcement by proposing a novel solution to the problem of underenforcement by monopolistic enforcers. Monopolistic enforcers underinvest in fine collection because, by maximizing net expected revenue, they ignore the social benefits of deterrence. We show that this problem can be partially resolved by combining the tasks of law enforcement with tax collection because a joint enforcer-collector will have an interest in reducing the crime rate in order to maximize his income from taxes. In support of the theory, we discuss two historical examples of this practice: decentralized law enforcement under European feudalism, and centralized law enforcement in the Ottoman Empire. |
| Keywords: | Criminal fines, deterrence, private law enforcement, tax collection |
| JEL: | H11 K42 N40 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2010-03&r=acc |