nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2013‒11‒02
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The Effect of IPSAS on Reforming Governmental Financial Reporting: an International Comparison By J. CHRISTIAENS; C. VANHEE; F. MANES-ROSSI; N. AVERSANO
  2. What Shapes the Gatekeepers? Evidence from Global Supply Chain Auditors By Jodi L. Short; Michael W. Toffel; Andrea Read Hugill
  3. Taxes and the Choice of Organizational Form by Entrepreneurs in Sweden By Edmark, Karin; Gordon, Roger
  4. Territorial vs. Worldwide Corporate Taxation: Implications for Developing Countries By Thornton Matheson; Victoria J. Perry; Chandara Veung
  5. Indirect Taxation, Public Pricing and Price Cap Regulation: a Synthesis By Valentini, Edilio
  6. Who benefits from partial tax coordination? By Yutao Han
  7. The Taxation of Nonrenewable Natural Resources By Gérard GAUDET; Pierre LASSERRE
  8. Missing Trader Fraud in European VAT By Sebastian Pfeiffer; Pavel Semerad
  9. An Evaluation of IMF External Balance Assessment Methodology and a Sensitivity Analysis on the Trade Elasticities By M. Fatih Ekinci; Zubeyir Kilinc

    Abstract: Over the past 25 years significant New Public Management (NPM) reforms, particularly towards accrual accounting, have characterized the public sector in many countries. The diversity in public financial information systems created a need for harmonization, resulting in the elaboration of International Public Sector Accounting Standards (IPSAS). Despite their relevance, little is known on the adoption process of IPSAS. This study aims to examine to what extent IPSAS-inspired accrual accounting is adopted in central / local governments worldwide as well as to investigate which factors affect the differing level of their adoption. Methodologically, a specific questionnaire constructed to obtain relevant information from local experts was sent worldwide to a sample of countries. The study reveals an important move to accrual accounting, particularly to IPSAS-accrual accounting whereby there still remains a level of reluctance mainly in central governments, especially in countries where businesslike accrual accounting has been developed.
    Keywords: Comparative public accounting, IPSAS, local government, central government accounting reform
    Date: 2013–08
  2. By: Jodi L. Short (UC Hastings College of Law); Michael W. Toffel (Harvard Business School, Technology and Operations Management Unit); Andrea Read Hugill (Harvard Business School, Technology and Operations Management Unit)
    Abstract: Private gatekeeping institutions, from credit rating agencies to supply-chain auditors, are important players in contemporary regulatory regimes. Yet little is known about what influences the decisions of the individual accountants, auditors, analysts, and attorneys who interpret and apply the rules embodied in the regulatory schemes they help to implement. Drawing on insights from the literatures on street-level bureaucracy and on regulatory and audit design, we theorize and investigate the economic incentives and social institutions that shape the gatekeeping decisions of private supply-chain auditors. We find evidence to support the argument that auditors' decisions are influenced by financial conflicts of interest. But we also find evidence that their decisions are shaped by social factors, including an auditor's experience, gender, and professional training; ongoing relationships between auditors and audited factories; and gender diversity on audit teams. By demonstrating the contributions of both economic incentives and social institutions to gatekeeping decisions, our research significantly extends the gatekeeping literature's narrow focus on economic incentives. By providing the first comprehensive and systematic findings on supply-chain auditing practices, our study also suggests strategies for designing private regulatory regimes that will more effectively detect and prevent corporate wrongdoing.
    Keywords: gatekeepers, industry self-regulation, auditing, codes of conduct, supply chains, corporate social responsibility, globalization
    Date: 2013–10
  3. By: Edmark, Karin (Uppsala Center for Fiscal Studies); Gordon, Roger (University of California, San Diego)
    Abstract: This paper estimates the role of both tax and non-tax determinants in the choice in Sweden to be a closely-held corporation vs. a proprietorship, using individual data for 2004 to 2008 on owners of closely-held businesses. While lower-income individuals face relatively neutral incentives, higher income individuals face strong tax incentives to be corporate. The data suggest a relatively strong correlation between these tax incentives and the likelihood that a firm is corporate. Many conventional non-tax determinants are confirmed in the data as well.
    Keywords: self-employment; entrepreneurship; taxation of closely-held businesses; business organizational form
    JEL: G32 G38 H25
    Date: 2013–10–11
  4. By: Thornton Matheson; Victoria J. Perry; Chandara Veung
    Abstract: Global investment patterns mean that effective taxation of foreign investors is of increasing importance to the economies of lower income countries. It is thus of considerable concern that the historical framework for cross-border income tax arrangements is not always well suited to allow low-income countries (LICs) effectively to generate tax revenues from profits on foreign direct investment (FDI). Several aspects of this framework contribute to the problem. This paper discusses, in particular, the likely effect of a shift by major economies from the system of worldwide corporate taxation toward a territorial system on the volume, distribution, and financing of FDI, focusing on LICs. It then empirically analyzes bilateral outbound FDI data for the UK for 2002–10 to determine whether the move to territoriality made corporations more sensitive to hostcountry statutory tax rates. Supporting evidence for this hypothesis is found for FDI financed from new equity.
    Keywords: Corporate taxes;United Kingdom;Japan;Foreign direct investment;Developing countries;Low-income developing countries;Tax revenues;international corporate income tax, international taxation, worldwide taxation, territorial taxation, foreign direct investment in developing countries
    Date: 2013–10–03
  5. By: Valentini, Edilio
    Abstract: It is well known that many standard results on optimal taxation and tax reforms have a straightforward counterpart in the monopoly pricing context and the Ramsey-Boiteux pricing rule represents the most obvious and well known example of this connection. What is less acknowledged, maybe even by many regulatory economists, is that this parallelism exists also with respect to a number of properties that characterize some types of price cap regulation. This paper reviews the economic literature that explored such properties, showing that there is a strong parallelism between the price cap results that are surveyed in this paper and those originating from the well-established theories on optimal indirect taxation and tax reforms, as well as public pricing.
    Keywords: Indirect taxation, public pricing, price cap regulation
    JEL: H21 L51
    Date: 2013–09–30
  6. By: Yutao Han (
    Abstract: In this paper, we investigate whether partial tax coordination is beneficial to countries within and outside a tax union, in which countries are supposed to compete in taxes and infrastructure. Our results demonstrate that, a subgroup of countries agreeing on a common tax rate, can harm both member and nonmember states. This is in contrast to the classical findings that partial tax harmonization is Pareto improving. When a minimum tax rate is imposed within a tax union, we demonstrate that it does not necessarily improve the welfare of the member countries. Moreover, both the high tax and low tax countries can be worse off. This is at odds with a classical result that a high tax country benefits from the imposition of a lower tax bound.
    Keywords: Tax competition, infrastructure competition, partial tax coordination, social welfare
    JEL: H21 H87 H73 F21 C72
    Date: 2013
  7. By: Gérard GAUDET; Pierre LASSERRE
    Abstract: We provide an analytical overview of the distortionary eects of some common forms of taxes faced by the nonrenewable resources sector of the economy. In the category of taxes meant specifically to capture the resource rent, we look at a specific severance tax, an ad valorem severance tax, a profit tax and a "lump-sum" tax, with emphasis on their effects on the extraction decisions over time and on the initial reserves to be developed. In the category of taxes meant for all sectors of the economy, we look at the corporate income tax and its special provision for the resource sector in the form of a depletion allowance, with emphasis on the effects on the intra-industry resource extraction decisions and on the inter-industry allocation of investment.
    Keywords: Nonrenewable resources, taxation, neutrality, distortion, resource rent, capital allocation
    JEL: Q31 Q38 H21
    Date: 2013
  8. By: Sebastian Pfeiffer (Institute for Austrian and International Tax Law, Vienna University of Economics and Business); Pavel Semerad (Department of Accounting and Taxes, Faculty of Business and Economics, Mendel university in Brno)
    Abstract: This article deals with various aspects of carousel frauds in which missing traders play a crucial role during intra-union transactions. The most important question is how to stop this kind of crime, which causes a huge tax gap in collecting value added tax. In this paper a detailed analysis of fraud patterns including model calculations was carried out. Very important for tax administration in the European Union are judgments of the European Court of Justice dealing with questions concerning the controversial parts and interpretations of the law in Member States and the Directive. Several judgments from Austria, the Czech Republic and Germany aimed at fraud in value added tax were used. Special emphasis is devoted to the solution to tackle VAT and carousel frauds. The opinions of the authors and the European Union are discussed and new planned solutions to fraud are examined as well. Although QRM allows Member States to apply for an exemption to introduce reverse charge mechanism, the Czech Republic is used as a model example to show legal solutions after earlier unsuccessful application for reverse charge mechanism on fuel sale.
    Keywords: Carusel fraud, missing trader, value added tax, tax evasion
    JEL: H20 H26
    Date: 2013–10
  9. By: M. Fatih Ekinci; Zubeyir Kilinc
    Abstract: [EN] The IMF introduced the EBA, as a successor to the CGER, to fulfill its exchange rate evaluation mandate. In this study, we provide a discussion and a set of critiques on the new methodology. Although all of the critiques are very critical to be addressed for a proper examination of the external balance dynamics of the economies, in this particular study, we focus on the translation process of a current account gap into a real exchange rate gap with a specific emphasis on the Turkish economy. The process is particularly important because the methodology implies that the estimated current account gap can solely be closed by exchange rate policies. Therefore, the implementation requires a tightly estimated set of trade elasticities with respect to the real exchange rate. However, the literature reports a wide range of estimates for the trade elasticities of the Turkish exports and imports. We first obtain a current account norm and calculate the current account gaps for Turkey over the recent period according to the External Sustainability approach. A sensitivity analysis on the trade elasticities reveals that the EBA might present a huge dispersion in the estimated real exchange rate gaps. We conclude that the IMF’s assessments on the real exchange rate based on the EBA should be taken very cautiously, especially during the high current account to GDP ratio times. [TR] IMF, kurlari degerlendirme gorevini yerine getirmek uzere CGER metodunun yerine EBA metodolojisini uygulamaya baslamistir. Bu calisma, yeni metodolojiyi tartisip bazi elestiriler siralamaktadir. Ulkelerin dis denge analizlerinin dogru bir sekilde yapilabilmesi için bu elestirilerin hepsinin çok kritik olmasina ragmen, Turkiye ekonomisine ozel vurgu yapilarak cari dengedeki acigin reel kur acigina donusturulmesi islemi uzerinde durulmaktadir. Bu islem, metodolojinin tahmin edilen cari dengedeki acigin sadece kur politikalari ile kapatilabilecegi ongorusunden dolayi ozel bir oneme sahiptir. Dolayisiyla bu surecte dis ticaretin kur esnekliklerinin cok iyi hesaplanmasi gerekmektedir. Ancak, bu konuda yapilmis calismalar Turkiye’nin ithalat ve ihracatinin kur esneklikleri icin cok genis bir aralik vermektedir. Oncelikle Surdurulebilir Dis Denge yaklasimi kullanilarak Turkiye icin norm cari denge tahmini yapilmakta ve bu tahmin dogrultusunda yakin donem icin cari dengedeki acik hesaplanmaktadir. Yapilan ticaret esnekliklerine duyarlilik analizi ise EBA yontemiyle tahmin edilen reel kur aciklarinda cok genis bir dagilim oldugunu ortaya cikarmaktadir. Bu nedenle, IMF’nin reel kur degerlendirmelerinin, ozellikle yuksek cari acik verilen donemlerde, cok dikkatli yorumlanmasi gerektigi ortaya cikmaktadir.
    Date: 2013

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