nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒10‒01
eight papers chosen by

  1. "Value Relevance of Firms’ Reportable Segment Profit or Loss Reconciliation" By Nunung Nuryani
  2. Impact of Companies' Financial Condition and Growth toward Acceptance of Going Concern Audit Opinion: Empirical Study at Company Listed in the Jakarta Islamic Index (JII) By Siti Maria Wardayati
  3. Does Recognition versus Disclosure Affect Risk Relevance? Evidence from Finance Leases in Japan By Masaki Kusano
  4. Evidence-based threat-of-audit letters: do taxpayers respond strategically in a complex environment? By Carlo, Fiorio; Alessandro, Santoro
  5. "The Influence of Leadership and Organizational Structure on The Quality of Accounting Information System" By Rapina
  6. "Understanding AIS User Knowledge, AIS Quality, and Accounting Information Quality" By Yenni Carolina
  7. Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France. By Youssef Benzarti; Dorian Carloni
  8. Europe’s fourfold union: Updating the 2012 vision By Nicolas Véron

  1. By: Nunung Nuryani (Master of Accounting Program, Institut Bisnis dan Informatika Kwik Kian Gie, Indonesia. Author-2-Name: Tan Thing Heng Author-2-Workplace-Name: Faculty of ICT, Universitas Multimedia Nusantara, Tangerang, Indonesia Author-3-Name: Phan Ferah Author-3-Workplace-Name: Institut Bisnis dan Informatika Kwik Kian Gie, Jakarta, Indonesia)
    Abstract: "Objective – The International Financial Reporting Standards (IFRS) No.8 adopted in Indonesian GAAP (Statement No. 5, 2012) requires a company to provide a reconciliation of the total of the reportable segments’ profit or loss of the firm’s profit or loss. The objective of this standard is to improve the value relevance of information in the financial statement. This study aims to investigate the value relevance of the segment reconciliation and the determinants of segment income dissimilarity, i.e. agency cost, proprietary cost, and audit quality. Methodology/Technique – Data used in this study was a secondary data obtained from 142 manufacturing companies listed in Indonesia Stock Exchange (IDX) for the period 2009 to 2013. Purposive sampling method yielded 59 firms. Two research models were used to test proposed hypotheses. Findings – The results show reconciliation of total of segments’ profit or loss of the firms’ profit or loss positively affects the market value of equity; this means segments’ reconciliation disclosure has value relevance for the investment decisions. In addition, this paper provides evidence that audit quality negatively affects the segment income dissimilarity, while agency cost and proprietary cost have no effect. This is consistent with hypothesis that firms audited by the Big Four tend to avoid disclosure of dissimilarity between firms profit or loss and segment profit or loss. Novelty – Our findings show that audit quality (Big 4 accounting firms) plays an important role in reducing dissimilarity between the sum of segment profit and firm profit (segment profit dissimilarity)"
    Keywords: Segment Reconciliation; Value Relevance; Agency Cost; Proprietary Cost; Audit Quality.
    JEL: M41 M42
    Date: 2017–06–23
  2. By: Siti Maria Wardayati (Faculty of Economics and Business, University of Jember, Indonesia. Author-2-Name: Agung Budi Sulistiyo Author-2-Workplace-Name: Faculty of Economics and Business, University of Jember, Indonesia. Author-3-Name: Rahman El Junusi Author-3-Workplace-Name: Walisongo Islamic Univercsity of Semarang, Indonesia Author-4-Name: Alamsyah Author-4-Workplace-Name: Faculty of Economics and Business, University of Mataram, Indonesia Author-5-Name: Labitsta Untsa Afnany Author-5-Workplace-Name: Faculty of Economics and Business, University of Jember, Indonesia.)
    Abstract: "Objective – This study aims to explain the companies' financial condition and growth which is affecting going concern audit opinion of the companies listed in the Jakarta Islamic Index (JII). Financial condition is examined through the information changes in working capital to total assets, retained earnings to total assets, earnings before interest and taxes to total assets, book value of equity to book value of total liabilities, sales to total assets. Methodology/Technique – This study applies qualitative research with a description method and the populations used are all companies listed in JII period 2014-2015. Findings – The results of the study explained that the companies' financial conditions affect going concern audit opinion. The worse the financial condition of the company, the greater the probability of companies to receive going concern audit opinion, and vice versa. An auditor will give a going concern audit opinion on companies that are experiencing financial difficulties. The growth of the companies affects going concern audit opinion. If the sales growth is negative, the continuity of the company will be unstable, because the company will be difficult to make profits. It can cause the financial conditions of the company experience difficulties, so that the company will receive going concern audit opinion. Novelty – The study contributes literature with its empirical findings in the context of Indonesia."
    Keywords: Working Capital to Total Assets; Retained Earnings to Total Assets; Earnings Before Interest and Taxes to Total Assets; Book Value of Equity to Book Value of Total Liabilities; Sales to Total Assets and the Company's Growth.
    JEL: M41 M42
    Date: 2017–07–08
  3. By: Masaki Kusano
    Abstract: This study examines the risk relevance of recognized versus disclosed finance leases in Japan. In particular, this study investigates whether and why equity investors treat recognized finance lease obligations differently from disclosed finance lease obligations when assessing firms’ equity risk. This study shows that recognized finance leases are associated with equity risk but that disclosed finance leases are not. Moreover, the relations between recognized versus disclosed finance leases and equity risk are substantially different. However, for firms with higher levels of institutional ownership, the risk relevance of disclosed finance leases is similar to the risk relevance of recognized finance leases. These results suggest that institutional investors are more sophisticated at processing disclosed finance leases and treat ing disclosed and recognized finance leases similarly when assessing firms’ equity risk. This study provides the evidence that investors’ information processing has significant effects on the risk relevan ce of lease arrangements. This study contributes to the accounting literature on recognition versus disclosure and to the discussions on the global convergence of accounting standards.
    Keywords: Recognition versus Disclosure, Finance Leases, Equity Risk, Institutional Ownership
    JEL: M41 M48
    Date: 2017–09
  4. By: Carlo, Fiorio; Alessandro, Santoro
    Abstract: Evidence-based threat-of-audit letters: do taxpayers respond strategically in a complex environment?
    Keywords: Tax Compliance by Businesses, Threat-of-audit letters
    JEL: H26
    Date: 2017–09–26
  5. By: Rapina (Department of Accounting, Maranatha Christian University, Indonesia)
    Abstract: "Objective – The purpose of this research is to test and find empirical evidences on the effect of leadership and organization structure in the quality of accounting information system. Methodology/Technique – The analytical units used in this research are state-owned enterprises enlisted in Bandung. The total samples are 49 respondents worked for state-owned enterprises in Bandung. Sample selection is done using purposive sampling method. The hypothesis in this study is tested by using multiple linear regression. Findings – There are two variables that significantly influence quality of accounting information system. These are leadership and organizational structure. Novelty – The study looked at the effect of leadership and organizational structure that significantly influence quality of accounting information system."
    Keywords: Leadership; Organizational Structure; AIS; Information System; System.
    JEL: M15 M41
    Date: 2017–07–14
  6. By: Yenni Carolina (Maranatha Christian University, Bandung, Indonesia)
    Abstract: "Objective – Nowadays, computer-based systems are used more to create, store and transfer information. Reliable accounting information will have impact on decision making. In other words, the success of an organization will depend heavily on the accounting information quality owned. Accounting information is generated from accounting information systems. The objective of this research is to know the extent if the knowledge influence of accounting information users towards implementation quality of accounting information systems and implication towards accounting information quality. Methodology/Technique – Instrument of data collection is using enclosed questionnaire filled by managers/chief of accounting and finance as well as branch chief of 63 insurance companies in Indonesia. SEM-PLS is used as a tool for processing data and hypothesis testing. Findings – The result of this research obtained empirical evidence that quality of accounting information systems implementation is influenced by knowledge of accounting information systems use and quality of accounting information influenced by quality of accounting information systems implementation. Novelty – The result of this study is consistent with theories and strengthens previous research results. The result contributes to the development of science, especially in the field of AIS."
    Keywords: AIS; User Knowledge; Accounting Information.
    JEL: M15 M41
    Date: 2017–07–13
  7. By: Youssef Benzarti; Dorian Carloni
    Abstract: In this paper we evaluate the incidence of a large cut in value-added taxes (VAT) for French sit-down restaurants. In contrast to previous studies that focus on prices only, we estimate its effect on four groups: workers, firm owners, consumers and suppliers of material goods. Using a difference-in-differences strategy on firm-level data we find that: (1) the effect on consumers was limited, (2) employees and sellers of material goods shared 25 and 16 percent of the total benefit, and (3) the reform mostly benefited owners of sit-down restaurants, who pocketed 41 percent of the tax cut.
    JEL: H20 H22 H23
    Date: 2017–09
  8. By: Nicolas Véron
    Abstract: A version of this material was originally published as a written statement prepared for the Expert Meeting on Deepening the Economic & Monetary Union, Dutch Tweede Kamer, Finance Committee, The Hague, 13 September 2017. The depiction of the euro area/European Union (EU) as a ‘fourfold union’ (financial union, fiscal union, economic union, political union) emerged in the first half of 2012 at the height of the euro-area crisis. It was primarily shaped by the recognition of the bank-sovereign vicious circle and the need to break it to ensure the survival of Economic and Monetary Union (EMU). This framing of EMU and EU integration is inevitably simplistic but its four-part categorisation remains relevant and useful when assessing current and future challenges to European integration. In the past half-decade, Europe’s financial union has been significantly strengthened but remains incomplete and is challenged by the expected exit of the United Kingdom (Brexit). No consensus has been found on fiscal union, and the existing fiscal framework based on administrative control is problematic. Economic union has not made material progress. Political union, a more intangible notion, might have advanced further than many observers realise, even as national politics remain paramount for the vast majority of EU citizens. A near-term agenda to strengthen EMU, for which decisions could be made in the course of 2018 and without any treaty change, should rest on a balance of further risk-sharing and enhanced market discipline, building on the significant risk reduction achieved over the last half-decade. At the heart of this next step of integration would be regulatory curbs on banks’ sovereign exposures in the euro area and a European deposit insurance scheme. Complementary initiatives should include, on the fiscal side, a reform of the accounting and auditing framework that applies to euro-area member states, and on the (structural) economic side, a new architecture of sector-specific EU authorities to enforce the single market in regulated industries. A more ambitious vision would have to include the European pooling of selected tax revenue streams to support an incipient fiscal union. The corresponding policy debate, however, might be best delayed until after the next European Parliament elections in June 2019.
    Date: 2017–09

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