nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒08‒13
eight papers chosen by

  1. Bank secrecy laws and tax havens:Expanding areas and possible roles for computer forensic accounting By DiGabriele, Jim; Ojo, Marianne
  2. The Structure of State Corporate Taxation and its Impact on State Tax Revenues and Economic Activity By Juan Carlos Suárez Serrato; Owen M. Zidar
  3. Economic importance of the logistics sector in Belgium By Emrah Arbak
  4. Global Inspection Games (GIG) in the laboratory By Sanchez Villalba, Miguel
  5. The ABCs of Nonfinancial Defined Contribution (NDC) Schemes By Holzmann, Robert
  6. Business Taxation and Wages: Redistribution and Asymmetric Effects By Thomas K. Bauer; Tanja Kasten; Lars-H. R. Siemers
  7. Economic importance of the logistics sector in Belgium By Helga Dedoncker
  8. The Evolution of Potential VAT Revenues and C-Efficiency in Advanced Economies By Junji Ueda

  1. By: DiGabriele, Jim; Ojo, Marianne
    Abstract: Over the years, forensic accounting has expanded not just in respect of investigative accounting, but also in relation to areas which encompass forensic valuation studies and computer forensics. Whilst fraud detection has continued to constitute a vital element which links forensic accounting and auditing – particularly in matters relating to audit trails, new possibilities and roles continue to emerge in relation to forensic accounting – and in view of greater manipulative and innovative areas which have been fostered by improved, sophisticated and advanced technologies. Such technologies facilitating highly innovative criminal cover-ups which have continued to prove invaluable for the set-up and facilitation of fraudulent and fictitious accounts which have not only encouraged money laundering activities, but also criminal engagement in bank secrecy and transfers involving tax havens.
    Keywords: bank; secrecy; tax havens; forensic accounting
    JEL: K2 M4 N2
    Date: 2017–08
  2. By: Juan Carlos Suárez Serrato; Owen M. Zidar
    Abstract: This paper documents facts about the state corporate tax structure — tax rates, base rules, and credits — and investigates its consequences for state tax revenue and economic activity. We present three main findings. First, tax base rules and credits explain more of the variation in the state corporate tax revenue than tax rates do. Second, although states typically do not offset tax rate changes with base and credit changes, the effects of tax rate changes on tax revenue and economic activity depend on the breadth of the base. Third, as states have narrowed their tax bases, the relationship between tax rates and tax revenues has diminished. Overall, changes in state tax bases have made the state corporate tax system more favorable for corporations and are reducing the extent to which tax rate increases raise corporate tax revenue.
    JEL: H2 H25 H71 R5
    Date: 2017–08
  3. By: Emrah Arbak (European Commission, Directorate-General for Financial Stability, Financial Services and Capital Markets Union, FISMA E.2)
    Abstract: Loan loss reserves make up an essential part of a bank’s soundness and more generally its viability. An under-provisioned reserve account implies that capital ratios may overstate a bank’s ability to absorb future losses. For this reason, both supervisory authorities and investors regularly assess the adequacy of the loan loss provisions alongside the more popular capital ratios. The aim of the paper is to identify what motivates the loss provisioning policies employed by Belgian banks, especially whether banks use provisioning to inter-temporally smooth their earnings or capital positions. Owing to the relatively long data series, the paper also investigates whether the introduction of the IAS-39 "incurred loss" accounting standards or the onset of the financial crisis in 2008/9 had any impact on the provisioning decisions. The results show that provisioning practices of Belgian banks have been rather tightly linked to future losses, although the relationship has weakened considerably after the introduction of the IAS-39 standards and, to a lesser extent, after the financial crisis. There is also evidence that Belgian banks might have used provisioning decisions to manage their current earnings and to some extent to signal future profitability, although the latter motive also appears to have weakened after the introduction of IAS-39 standards.
    Keywords: Belgian credit institutions; loan loss provisioning; event-based provisioning; forwardlooking provisioning; earnings-smoothing; cyclical provisioning; implementation of international accounting standards.
    JEL: C23 G14 G21 G28 M41
    Date: 2017–08
  4. By: Sanchez Villalba, Miguel
    Abstract: Sanchez Villalba (2015) claims inspection games can be modelled as global games when agents face common shocks. For the tax evasion game -his leading example- he prescribes that the tax agency should audit each individual taxpayer with a probability that is a non-decreasing function of every other taxpayer's declarations ("relative auditing strategy"). This paper uses experimental data to test the predictions of the model and finds supporting evidence for the hypothesis that the relative auditing strategy is superior to the alternative "cut-off" one. It also finds that data fit the qualitative predictions of the global game model, regarding both participants' decisions and the experiment's comparative statics.
    Keywords: Global Games, Experimental Economics, Tax Evasion, Rationality, Information, Beliefs
    JEL: C7 C91 D8 H26
    Date: 2017–08
  5. By: Holzmann, Robert (University of New South Wales)
    Abstract: Nonfinancial defined contribution (NDC) pension schemes have been successfully implemented since the mid-1990s in a number of European countries such as Italy, Latvia, Norway, Poland, and Sweden. The NDC approach features the lifelong contribution-benefit link of a financial defined contribution (FDC) personal account scheme, but is based on the pay-as-you-go format. At its start-up, the pay-as-you go commitments of the preceding defined benefit (DB) system are converted into individual personal accounts, allowing for a smooth transition from the DB to the DC format, while avoiding the very high transition costs inherent in a move from a traditional pay-as-you-go DB scheme to a fully funded FDC scheme. The NDC approach implemented by the rule book is able to manage the economic and demographic risks inherent to a pension scheme and by design creates financial sustainability. As in any pension scheme, the linchpin between financial stability and adequacy is the retirement age; in the NDC approach the individual retirement age above the minimum age is by design self-selected and by incentives should increase the effective retirement age in line with population aging. As a systemic reform approach NDC has become a strong competitor to piecemeal parametric reforms of traditional nonfinancial DB (NDB) schemes. While frequent, these reforms are far from transparent and usually too timid and too late to create financial sustainability while providing adequate pensions for the average contributor. This paper offers a largely nontechnical introduction to NDC schemes, their basic elements and advantages over NDB schemes, the key technical frontiers of the approach, and the experiences of NDC countries.
    Keywords: systemic pension reform, unfunded, individual accounts, Sweden
    JEL: H55 J11 J26
    Date: 2017–08
  6. By: Thomas K. Bauer (Ruhr-University Bochum and RWI Essen); Tanja Kasten (Deutsche Rentenversicherung Bund); Lars-H. R. Siemers (Siegen University)
    Abstract: Empirical evidence on the degree of business-tax shifting is rare. It remains open to which extent the tax burden is shifted, whether there are differences for tax increases and decreases, or whether there exists some treatment heterogeneity. Using a large administrative panel data set, we exploit the regional variation of the German business-income taxation and find that 65% to at most 93% is shifted to labour through real wage adjustments. We find that business taxation increases wage inequality significantly. Workers in a weak labour-market position bear the highest part of business taxation. The incidence effect of tax reliefs is significantly higher than that of tax increases. Therefore, reducing business taxes might, surprisingly, effectively reduce inequality.
    Keywords: tax incidence, profit taxation, wages, inequality, asymmetric effects
    JEL: H22 H25 H32 J31 J38
    Date: 2017
  7. By: Helga Dedoncker (Microeconomic Information Department, NBB)
    Abstract: This Working Paper assesses the economic importance of the logistics sector in Belgium for the period 2010-2015 on the basis of the data from the annual accounts submitted to the NBB’s Central Balance Sheet Office. The logistics sector was defined on the basis of the NACE-Bel nomenclature of activities and corresponds to what is generally referred to as the professional logistics sector. The sector’s economic importance was calculated via two different channels, namely the direct and indirect effects. The direct effects concern the contribution made within the sector itself in terms of value added, employment and investment. Those results are also broken down according to firm size and region. The indirect effects generated by the sector through its links with the rest of the economy are estimated for the variables employment and value added. The sensitivity of the results to the definition of the sector is then assessed by a rough estimate of the logistic activities taking place outside the defined sector. The results of the calculations show that in 2015 the logistics sector directly created € 11.9 billion in value added and employed 134 000 full-time equivalents; in so doing, the sector contributed 2.9% of GDP and 3.3% of domestic employment expressed in full-time equivalents). The total economic importance of the logistic sector – i.e. including the indirect effects generated by the sector– came to 4.6% of GDP and 5.4% of domestic employment. If the definition of the sector is extended to include logistic activities outside the defined sector, the estimates for both percentages increase by more than half, to roughly 7.6% of GDP and 8.0% of domestic employment. In the Working Paper, the analysis of the sector’s economic importance is supplemented by an analysis from the social and financial point of view, presenting the findings relating to the social balance sheet, the financial ratios, the NBB’s financial health indicator, and credit risk based on the NBB’s In-house Credit Assessment System.
    Keywords: transport, logistics, sector analysis, value added, employment, investment, indirect effects
    JEL: J21 L91 R11 R41
    Date: 2017–07
  8. By: Junji Ueda
    Abstract: To understand the cyclical movements of value-added tax (VAT) revenues in advanced economies, this paper analyzes changes in the C-efficiency ratio by decomposing it into changes in the compliance and policy gaps between 2000 and 2014. The results from a panel of EU member countries and Japan suggest that the cyclicality of C-efficiency is explained by the correlation of both gaps with the output gap. The cyclicality of the compliance gap appears to be short lived, and larger in countries with high compliance gaps. The cyclicality of the policy gaps largely reflects not changes in policy parameters, but rather, behavior-induced changes, notably in government consumption and, to a lesser degree, in the composition of household consumption.
    Keywords: Tax compliance;value-added tax, tax gap, C-efficiency ratio, elasticity of tax revenue, General, Business Taxes and Subsidies
    Date: 2017–07–11

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