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on Accounting and Auditing |
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Issue of 2018‒04‒09
nine papers chosen by |
| By: | Suzanne Flynn; Delphine Moretti; Joe Cavanagh |
| Abstract: | This technical note and manual (TNM) explains what accrual accounting means for the public sector and discusses current trends in moving from cash to accrual accounting. It outlines factors governments should consider in preparing for the move and sequencing of the transition. The note recognizes that governments considering accounting reforms will have different starting points across the public sector, different objectives, and varying coverage of the existing financial statements, it therefore recommends that governments consider each of these, and the materiality of stocks, flows and entities outside of government accounts when planning reforms and design the sequencing and stages involved accordingly. Building on international experiences, the note proposes four possible phases for progressively increasing the financial operations reported in the balance sheet and operating statement, with the ultimate aim of including all institutional units under the effective control of government in fiscal reports. |
| Date: | 2016–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imftnm:16/06&r=acc |
| By: | Masahiro Enomoto (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan) |
| Abstract: | Over the last two decades, a growing body of literature has investigated the factors influencing the differences in financial reporting, especially earnings quality, in an international setting. The purpose of this paper is to provide an overview of the cross-country research that focuses on earnings quality and to offer suggestions for future topics in the field. In this study, I first discuss the relationship between earnings quality and the following institutional and cultural factors that have been examined in prior literature: legal tradition, investor protection (outside investor rights and legal enforcement), tax system, regulations, financial development, market competition, accounting standards (divergence from IAS), enforcement of accounting standards, culture, religiosity, and language. Second, the relationship between the improvement of earnings quality and International Financial Reporting Standards (IFRS) adoption is described. The results are mixed and suggest that a single set of accounting standards that are generally viewed as high quality does not always improve earnings quality. In addition, the relationship varies with the institutional and cultural factors of a country. It means that improvement through IFRS adoption would require the development of an institutional environment. Finally, as a prospect for future research, this paper discusses the extension from a single-country to cross-country study, the impact of IFRS adoption on the contracting role of accounting through the change in earnings quality, and earnings quality of non-listed firms in an international setting. These topics have become a more fruitful avenue of research with the recent increase in the availability of data. |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2018-06&r=acc |
| By: | Eric Zwick |
| Abstract: | Does tax code complexity alter corporate behavior? This paper investigates this question by focusing on the decision to claim refunds for tax losses. In a sample of 1.2M observations from the population of corporate tax returns, only 37% of eligible firms claim their refund. A simple cost-benefit analysis of the tax loss choice cannot explain low take-up, which motivates an investigation of how tax complexity alters this calculation. A research design exploiting tax preparer switches, deaths, and relocations shows that sophisticated preparers increase the claiming behavior of small and mid-market firms. Tax complexity decreases take-up among large firms through interactions of refund claims with other tax code provisions and with the audit process. |
| JEL: | D22 D92 E62 H2 H25 H3 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24382&r=acc |
| By: | Eric Hutton |
| Abstract: | The IMF Fiscal Affairs Department’s Revenue Administration Gap Analysis Program (RA-GAP) assists revenue administrations from IMF member countries in monitoring taxpayer compliance through tax gap analysis. The RA-GAP methodology for estimating the VAT gap presented in this Technical Note has some distinct advantages over commonly used methodologies. By using a value-added approach to estimating potential VAT revenues, as compared to the more traditional final consumption approach used by most countries undertaking VAT gap estimation, the RA-GAP methodology can provide VAT compliance gap estimates on a sector-by-sector basis, which assists revenue administrations to better target compliance efforts to close the gap. In addition, the RA-GAP methodology uses a unique measurement for actual VAT revenues, which isolates changes in revenue performance that might be due to cash management (e.g., delays in refunds) from those due to actual changes in taxpayer compliance. |
| Keywords: | Tax administration;Tax compliance;Value added tax;Tax revenues;Econometric models;Tax Administration; Tax Compliance; Value-Added Tax; Tax Gap; Tax Avoidance; Tax Evasion, Tax Administration, Tax Compliance, Value-Added Tax, Tax Gap, Tax Avoidance, General, Business Taxes and Subsidies, General |
| Date: | 2017–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imftnm:17/04&r=acc |
| By: | International Monetary Fund |
| Abstract: | In response to a request from the National Bank of Georgia (NBG), and with the support of the International Monetary Fund’s (IMF’s) Middle East and Central Asia Department, a financial accounts (FA) and financial soundness indicators (FSIs) technical assistance (TA) mission visited Tbilisi, Georgia, during September 18–29, 2017. The mission complemented the work of the October 2016 TA mission on financial and sectoral accounts. Its main objectives were to assist the NBG in: (i) compiling and disseminating quarterly FA by institutional sector; (ii) compiling and disseminating flow-based monetary statistics for the central bank and other depository corporations (ODCs); (iii) producing a quarterly balance sheet approach (BSA) matrix; (iv) reviewing the source data and compilation methodology of FSIs; and (v) improving the reporting frequency of FSIs. |
| Date: | 2018–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:18/60&r=acc |
| By: | Villacorta, Alonso |
| Abstract: | I propose and estimate a dynamic model of financial intermediation to study the different roles of the condition of banks’ and firms’ balance sheets in real activity. The net worth of firms determines their borrowing capacity both from households and banks. Banks provide risky loans to multiple firms and use their diversified portfolio as collateral to borrow from households. This intermediation process allows additional funds to flow from households to firms. Banks require net worth for intermediation as they are exposed to aggregate risk. The net worth of banks and firms are both state variables. In normal recessions, firm and bank net worth play the same role, so their sum determines the allocation of capital. During financial crises, shocks to bank net worth have an additional effect beyond that in standard financial frictions’ models. This mechanism works through intermediation and affects activity, even if shocks redistribute net worth from banks to firms. I estimate my model and find that the new mechanism accounts for 40% of the fall in output and 80% of the fall in bank net worth during the Great Recession. Finally, the model is consistent with the different dynamics of the share of bank loans in total firm debt and credit spreads during the recessions of 1990, 2001, and 2008. JEL Classification: E44, E32, G01 |
| Keywords: | balance sheet channel, financial crises, financial frictions, financial markets and the macroeconomy |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:srk:srkwps:201868&r=acc |
| By: | Chowdhury Mohammad Sakib Anwar; Alexander Matros; Sonali Sen Gupta |
| Abstract: | This paper presents a model that links tax evasion, embezzlement, and the public good provision and suggests how they are interrelated. We characterize the conditions for three types of Nash equilibria: tax evasion, embezzlement, and efficient public good provision. |
| Keywords: | Tax evasion, Embezzlement, Corruption, Audits, Sanctions, Public goods |
| JEL: | H40 D83 D73 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:232397285&r=acc |
| By: | Lucilla Mc Laughlin; John Buchanan |
| Abstract: | This technical note is provided as guidance to tax administrations that are considering a program to enhance the tax compliance of high wealth individuals. The note explains the rationale for a specialized compliance program for this segment of the taxpayer base and provides guidance on defining the population of wealthy individuals. Advice is also given on how to assess readiness for such a compliance program, taking into account the legal framework, the political environment, the availability of the necessary data and the administration’s capacity to implement it. The note then gives practical advice on implementing a high wealth individual compliance program, using the compliance risk management model as its foundation. |
| Keywords: | Tax evasion;Tax Administration; Tax Compliance; Tax Avoidance; Tax Audit; Personal Income Tax; Compliance Risk Management; High Wealth Individual; Ultra-High Wealth Individual; HWI Compliance Program, Tax Administration, Tax Compliance, Tax Avoidance, Tax Audit; Personal Income Tax, Compliance Risk Management, High Wealth Individual, Ultra-High Wealth Individual, HWI Compliance Program, General, Personal Income and Other Nonbusiness Taxes and Subsidies, Household |
| Date: | 2017–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imftnm:17/07&r=acc |
| By: | Umiaty Hamzani (Universitas Tanjungpura, Jl. Prof. Dr. H. Hadari Nawawi, 78124, Pontianak, Indonesia. Author-2-Name: Dinarjad Achmad Author-2-Workplace-Name: Universitas Tanjungpura, Jl. Prof. Dr. H. Hadari Nawawi, 78124, Pontianak, Indonesia) |
| Abstract: | Objective – This study aims to examine the risk of bankruptcy among SMEs to determine whether there are any significant differences in the financial performance between SMEs that apply accounting standard and those that do not. Methodology/Technique – This research uses a case study method to examine SMEs in the business incubator under the auspices of the Bank Indonesia in Pontianak. Descriptive analysis and independent sample tests are also used in this study. Findings – The results show that neither of the SME groups are predicted bankrupt under the financial distress model. Furthermore, the independent sample tests show that, if using a significance level of 5%, there is no difference in the financial performance of both groups. However, if using a significance level of 10%, there is a significant difference in both groups |
| Keywords: | Financial Distress Model; Financial Ratios; Financial Statements; Going Concern Accounting Principle; SAK ETAP; SMES. |
| JEL: | G32 G33 |
| Date: | 2018–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:afr152&r=acc |