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on Accounting and Auditing |
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Issue of 2018‒01‒22
eight papers chosen by |
| By: | DiGabriele, Jim; Ojo, Marianne |
| Abstract: | The digital economy, undoubtedly, has contributed to the immense task of clearly identifying, ascertaining, and accounting for sources, rationales, and audit trails relating to tax transactions. This is not only evident owing to difficulties associated with cross-border transaction regulations which govern different jurisdictions as well as the enforcement of such regulations, but also in respect of risks associated with the present global financial environment – all having generated from the rise in automation, increased and improved sophisticated technologies, globalization, and conglomeration. This chapter not only seeks to highlight the extent, contribution, and significance of the digital economy in respect of those risks associated with base erosion and profit shifting (BEPS) but also amongst other aims and objectives to recommend measures whereby regulations can be better enforced as a means of addressing practices associated with BEPS. |
| Keywords: | Multilateral Instruments; Joint Audits; Aggressive Tax Planning Schemes; Digital Economy; Transfer Pricing; Global Value Chains; Cross Sectional Services Risks |
| JEL: | E6 F4 K2 M41 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:83734&r=acc |
| By: | Etienne Redor (Audencia Recherche - Audencia Business School) |
| Abstract: | Two competing theories correlate board characteristics and audit fees. The Audit-Risk Perspective suggests that there is a negative relationship between the quality of corporate governance and audit fees while, contrarily, the Demand-Based Perspective posits a positive relationship between these two variables. In this paper, I reexamine the relationship between corporate board characteristics and audit fees by analyzing whether auditors adjust their fees in response to board turnover. If the departure of an effective director reduces the quality of corporate governance, a change in the audit fees should be observed. I show that when the variables are individually included in the regressions, audit fees significantly go down only when an independent director or a female director leaves. The departure of other board members has no impact on audit fees. When both of these variables (independence and gender) are included in the model, a significant decrease in audit fees is observed only when an independent director leaves. On the basis of my analysis, I conclude that the Demand-Based Perspective is correct and that director independence is the most significant variable for explaining the changes in audit fees following a change in corporate board membership. |
| Date: | 2017–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01624979&r=acc |
| By: | Alexander Lehmann |
| Abstract: | A version of this Policy Contribution was originally prepared as the in-depth section of Analysis of developments in EU capital flows in the global context, a report by Bruegel for the European Commission. The study is also available on the European Commission’s webpage. The market for distressed debt will need to play a more prominent role in Europe’s emerging strategy to tackle the legacy of non-performing loans (NPLs). This market could speed up NPL resolution and allow greater flexibility in bank balance sheet management. Investors could contribute crucial skills and possibly capital to the process of workout and restructuring. The loan sale process potentially suffers from a number of market imperfections which manifest themselves in high valuation gaps, and in the market failing to cover certain asset types. In Europe, turnover from distressed debt sales remains limited relative to the total stock of €870 billion in non-performing loans, and the additional stock of €1.1 trillion of so-called non-core banking assets, which banks also seek to divest in this market. There has so far been little market demand for the bulk of unsecured assets among small and medium-sized companies and other corporate borrowers, loans held by smaller banks with their higher NPL ratios, or exposures to larger enterprises that could benefit from comprehensive debt restructuring and additional finance. Significant further supply might now come into the market as stricter supervisory guidelines are implemented, and as new accounting guidelines force higher provisioning levels. Improved national restructuring and insolvency regimes are beginning to attract a wider range of investors. An initiative by EU finance ministers to improve transparency around loan quality and foster greater liquidity through transaction platforms might lower transaction-specific fixed costs somewhat. More decisive public support, for instance through asset management companies or in securitisation structures, might be needed. As a significant share of Europe’s banking assets might move into the hands of little-known investors, some of the benefits of relationship banking could be lost, and the conduct of the loan servicers will come into the focus of regulators. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:23816&r=acc |
| By: | Misun, Juraj |
| Abstract: | Controlling is a constantly ongoing managerial process of designing standards, measuring performance, comparing the performance with standards, and implementing corrective actions to ensure effective and efficient running of the organization's activities. Controlling represents one of the basic functions in management in Anglo-American understanding. The original term has been changed from control to controlling, as control is (like a plan in planning) only a small part of long-term activity. The term controlling, however, is also used in German literature, where it represents what Anglo-American literature refers as management (or managerial) accounting. As the Central and Eastern European literature is heavily influenced by German literature, in English-written papers published in Europe confusions often happen. Based on results of our questionnaire survey in 331 companies operating in Slovakia, which collected data at the turn of 2016 and 2017, we analyze the changes in management function of controlling and compare them with the findings in literature. We analyze the research results according to the different characteristics of the research sample, such as the size of the company by number of employees, the economic result, the respondent's position in the organizational structure of the company, or the respondent's attitude if he/she is an object or subject of control. Taking into account the quantitative and qualitative results obtained, we also present specific changes in the control of our businesses. |
| Keywords: | organizational control, management functions, changes |
| JEL: | M10 M19 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:83720&r=acc |
| By: | Ugo Troiano |
| Abstract: | Improving the efficiency of tax collection is important for development and fairness purposes. I study the Audit Exchange Information Agreements, which are agreements between the states and the U.S. federal government to exchange information about income tax audit plans and techniques, signed between the 1950s and the 1970s. Adopting an augmented difference-in-differences identification strategy, I show that the program increased state income tax revenues by about 15 percent. I show that mobility and the reported income do not appear to react to the policy, suggesting that the effects may be linked to higher quality auditing. The effects are stronger in places where there are more civic and social organizations, suggesting that tax compliance is higher when there is more cooperative gathering. |
| JEL: | H21 H26 H77 N92 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24153&r=acc |
| By: | Arun Advani (Institute for Fiscal Studies); William Elming (Institute for Fiscal Studies and Institute for Fiscal Studies); Jonathan Shaw (Institute for Fiscal Studies and Turing Institute) |
| Abstract: | Understanding tax non-compliance and the effectiveness of strategies to tackle it is crucial for a modern tax authority. In this paper we study how and why audits impact reported tax in the years after audit - the dynamic effect - for individual income taxpayers. We exploit data from a random audit program covering almost 35,000 income tax self assessment returns in the UK. We show that audits raise reported tax liabilities for at least ve years after audit, with the magnitude of the impact declining over time. In total this raises an additional $1; 230 per audited individual in the fi ve years after audit, 1.5 times the direct revenue raised from the audit. Looking by income source, we see that the magnitude of the initial impact is lower for income components which are third party reported, and the impact declines more quickly for components that are more volatile. We develop a model to allow us to distinguish different mechanisms that might explain the presence of dynamic effects, and show our fi ndings can only be explained by audits providing improved information to the tax authority. |
| Keywords: | tax audits, tax revenue, tax reporting decisions, income tax, self assessment, HMRC |
| JEL: | D04 H26 H83 |
| Date: | 2017–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:17/24&r=acc |
| By: | Hearson, Martin |
| JEL: | N0 |
| Date: | 2017–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:86396&r=acc |
| By: | Cesa-Bianchi, Ambrogio; Ferrero, Andrea; Rebucci, Alessandro |
| Abstract: | House prices and exchange rates can potentially amplify the expansionary effect of capital inflows by inflating the value of collateral. We first set up a model of collateralized borrowing in domestic and foreign currency with international financial intermediation in which a change in leverage of global intermediaries leads to an international credit supply increase. In this environment, we illustrate how house price increases and exchange rates appreciations contribute to fueling the boom by inflating the value of collateral. We then document empirically, in a Panel VAR model for 50 advanced and emerging countries estimated with quarterly data from 1985 to 2012, that an increase in the leverage of US Broker-Dealers also leads to an increase in cross-border credit flows, a house price and consumption boom, a real exchange rate appreciation and a current account deterioration consistent with the transmission in the model. Finally, we study the sensitivity of the consumption and asset price response to such a shock and show that country differences are associated with the level of the maximum loan-to-value ratio and the share of foreign currency denominated credit. |
| Keywords: | Capital Flows; Credit Supply Shock; Cross-border claims; Exchange Rates; House Prices; International Financial Intermediation.; leverage |
| JEL: | C32 E44 F44 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12501&r=acc |