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on Accounting and Auditing |
| By: | Shafii, Zurina (Universiti Sains Islam Malaysia, Nilai, Malaysia.); Abidin, Ahmad Zainal (RHB Investment Bank); Salleh, Supiah (Universiti Sains Islam Malaysia, Nilai, Malaysia.) |
| Abstract: | Shariah Governance and audit is one of the vital elements of corporation as it promotes principles of accountability, transparency and Shariah assurance of IFIs to the stakeholders. In addition to the clear structure of the organs of Shariah governance namely the Board of Directors, Shariah Committee and the Management, an Islamic Financial Institution (IFI) must ensure the Shariah compliance function to be carried out through the Shariah review and Shariah audit functions. The studies conducted on the practice of Shariah review and audit in the jurisdictions adopting Islamic finance revealed that both functions are conducted inconsistently. Many jurisdictions are yet to offer independent Shariah assurance as they only managed to perform Shariah review function. Shariah review serves as compliance function that provide review to the management on the state of IFIs’ Shariah compliance. Shariah audit, on the other hand, is an independent exercise that aims to examine the effectiveness of the internal control for Shariah compliance within the organization. Both of the functions serve as the Shariah assurance mechanisms that ensure robust practice of Shariah-compliant activities. This study identifies the practice of Shariah audit among GCC countries, namely Bahrain, Saudi Arabia, Kuwait, UAE and Qatar and in Islamic Development Bank’s member countries where Islamic finance is adopted as part of the mainstream finance, i.e. Sudan, Pakistan, Indonesia and Malaysia. Upon identifying the practice of Shariah assurance mechanisms, this study develops a model for Shariah audit that integrates the internal and external Shariah audit function. This study identifies the scope of Shariah audit that is to be performed by internal Shariah auditors and external Shariah auditors. In order to formulate the integrated internalexternal Shariah audit model, this study qualitatively analyses the arguably the most comprehensive guideline on Shariah governance Framework issued by Bank Negara Malaysia in 2010 and other guidelines issued in jurisdictions practicing Islamic finance that forms guiding principles for Shariah audit conduct. For the external Shariah audit function, the study refers to the standards that are applicable to Islamic financial transactions issued by the International Financial Reporting Standard (IFRS). This study is useful for policymaking in the jurisdictions that offer Islamic finance, with relation to Shariah assurance mechanisms, especially on policies related to Shariah audit conduct. The integrated model of internal-external Shariah audit will promote efficiency and effectiveness of Shariah audit practice in IFIs. |
| Keywords: | Shariah assurance; Shariah audit; Integrated Shariah audit model |
| JEL: | M41 M42 |
| Date: | 2015–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:irtiwp:1436_007&r=acc |
| By: | Congressional Budget Office |
| Abstract: | In 2016, low- and moderate-income workers will face an effective marginal tax rate of 31 percent, on average. Federal individual income and payroll taxes will be the main contributors. |
| JEL: | H20 H24 I38 |
| Date: | 2015–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:509233&r=acc |
| By: | Mustafa Göktuğ Kaya (Tax Inspectors Association); Perihan Hazel Kaya (Selcuk University) |
| Abstract: | The country, where the individuals and institutions benefit from public services paying less taxes outside the country, is called tax haven countries.These countries is used as part of economic activities and they are preferred as the center of financial affairs so the phenomenon of interstate competition become a current issue. International tax competition is a tax policy which implementing that economic activity that occurred in another country to take his own country putting a lower tax rate.When taken out the country known as a tax haven it is said that this countries are too small and some of them’ name and location in the map are unknown.The purpose of the study is to find out the relationship between of tax competition and tax haven in the World and Turkey. In this direction, firstly on the conceptual framework tax competition and tax havens issues will be discussed. Secondly, the effects of the relationship between tax competition and tax havens on fiscal policy will be examined. Finally, studies conducted on the fight against tax competition and tax havens in the World and Turkey will be examined. |
| Keywords: | Tax Competition, Tax Haven, Fiscal Policy, Turkey, Tax Haven Countries |
| JEL: | B22 E00 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:3606097&r=acc |
| By: | Lorenzo Sasso (National Research University Higher School of Economics) |
| Abstract: | This article examines the challenges to banking capital regulation posed by ongoing financial innovation through regulatory capital arbitrage. On the one hand, such practice undermines the quality of regulatory capital, eroding prudential capital standards, but most importantly it creates a distortion in the regulatory capital ratio measures, which prevents investors and regulators from identifying the bank’s real underlying risks. Opportunities for regulatory capital arbitrage arise as a consequence of the inherent mismatch of accounting goals, corporate law and prudential regulation – all interacting with the notion of capital for banks. On the other hand, financial innovation is the result of banks’ risk-management policies. In order to reduce the cost of capital and compliance banks engage in derivatives, structured finance and hybrid instruments, altering the risk/return of their cash flow and the information released to the market for disclosure. In a way, regulation is the solution but also part of the problem. For this reason, new regulation strategies for banks need to be implemented. Systemic risk and balance-sheet risk need to be tackled respectively with macro- and micro-prudential regulation. This would involve an international harmonization of the accounting standards and individualised capital adequacy requirements for banks. The regulation has to be functional for the market under examination. The regulator should therefore consider the adoption of prudential filters to make static variables such as accounting rules, which are normally focused on evaluation, more dynamic to give banks some financial flexibility in their risk-management policies. |
| Keywords: | Regulatory capital arbitrage; hybrid financial instruments; capital adequacy requirements; micro-prudential regulation; risk management; fair value accounting; IAS 32, IAS 39. |
| JEL: | Z |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:66/law/2016&r=acc |
| By: | Kaushal Kishore (Department of Economics, University of Pretoria) |
| Abstract: | When capital is sunk after it is invested, a host government facing heterogeneous foreign investors who differ in their cost of capital relocation (which falls over time) has a strong incentive to wait in order to gain from relatively lower cost of capital relocation and offer preferential taxes over time in order to attract less eager investors. We ?nd that, if the government can commit to future tax rates, the tax revenue increases as the cost of relocation decreases. Moreover, under preferential taxation scheme the equilibrium tax revenue of the government is equal to what it can earn under full commitment. The tax revenue under non-preferential taxation scheme is lower compare to full commitment outcome when cost of capital relocation falls considerably over time but remains strictly positive. Under every taxation schemes considered in this paper, the equilibrium tax rate falls over time if cost of capital relocation falls considerably which offers another explanation for- ``why the tax rate falls over time in tax treaties?" |
| Keywords: | Dynamic inconsistency, Foreign direct investment, Falling cost of capital relocation, Non-preferential taxation |
| JEL: | F21 H21 H25 H87 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201633&r=acc |
| By: | Maryam Firoozi; Michel Magnan; Steve Fortin |
| Abstract: | The diversity of boards of directors (or lack of thereof) is currently attracting significant attention from regulators and institutional investors all over the world, with some jurisdictions either imposing conditions (e.g., quotas on gender diversity) or requesting disclosure of measures taken to enhance diversity. Diversity is seen as providing boards with access to a wider pool of competencies, experiences and perspectives, which should be beneficial to board effectiveness. In this study, we investigate how a firm’s financial reporting quality relates to two dimensions of board diversity: geography and gender. Geographical diversity reflects directors’ geographical location relative to corporate headquarters. Our results show that financial reporting quality, as measured by the level of abnormal accruals and restatements, is lower for firms with independent directors who are geographically spread out than for firms with less geographically diverse boards. In addition, firms with more geographic diversified audit committee members have lower financial reporting quality. Moreover, we do not find any significant relationship between board gender diversity and financial reporting quality. Our findings hold after controlling for endogeneity and also alternate explanations. These findings suggest that firm-specific effects from board diversity do differ and are conditional upon the facet of the diversity being considered. Our results also indicate that regulators may need to take a more comprehensive approach if they push for board diversity. Depuis quelques années, la diversité des conseils d’administration (ou l’absence de diversité) constituent une préoccupation de plusieurs autorités réglementaires ou politiques, lesquelles sont parfois intervenues en imposant des conditions (p.ex., quotas) ou en requérant une divulgation exhaustive des mesures entreprises afin d’accroître la diversité d’un conseil. Cet intérêt pour la diversité découle de la prémisse qu’elle donne accès pour un conseil à un plus grand bassin de compétences, d’expériences et de perspectives, lequel amener celui-ci à être plus performant. Dans cette étude, nous examinons comment la qualité de la divulgation financière d’une entreprise est reliée à deux facettes de la diversité : géographique et de genre. La diversité géographique découle de la proximité (ou distance) entre la résidence d’un administrateur et l’endroit où est situé le siège administratif de l’entreprise. Nos résultats indiquent que les entreprises ayant une plus grande proportion d’administrateurs indépendants résidant loin du siège administratif de l’entreprise affichent des résultats financiers de moins bonne qualité, tel que capté par les accruals discrétionnaires et la fréquence des redressements comptables. En outre, il semble que la diversité de genre n’a pas d’effet sur la qualité des résultats financiers. Différentes analyses de sensibilité donnent des résultats similaires. Somme toute, il semble qu’il soit nécessaire de voir la diversité de manière plus globale car son effet est conditionné par la facette analysée. En outre, les pressions des instances de réglementation afin d’augmenter la diversité devraient tenir compte de sa nature multi-dimensionnelle. |
| Keywords: | Board of Directors, Geographical Diversity, Gender Diversity, Financial Reporting Quality, conseil d’administration, diversité géographique, diversité de genre, qualité des résultats financiers |
| Date: | 2016–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2016s-27&r=acc |