nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2018‒09‒03
seven papers chosen by

  1. Effects of Recognition versus Disclosure of Finance Leases on Audit Fees and Costs: Evidence from Japan By Masaki KUSANO; Yoshihiro SAKUMA
  2. Финансово счетоводни аспекти на търговската репутация By Atanasov, Atanas
  3. Multinational Profit Shifting and Measures throughout Economic Accounts By Jennifer Bruner; Dylan G. Rassier; Kim J. Ruhl
  4. Unwinding external stock imbalances? The case of Italy’s net international investment position By Valerio Della Corte; Stefano Federico; Enrico Tosti
  5. Tax Spillovers from US Corporate Income Tax Reform By Sebastian Beer; Alexander D Klemm; Thornton Matheson
  6. Global Implications of U.S. Tax Reform By Jack Mintz

  1. By: Masaki KUSANO; Yoshihiro SAKUMA
    Abstract: This study examines the effects of recognized versus disclosed lease arrangements in the Japanese audit market. In particular, we investigate whether the relations between recognized versus disclosed finance leases and audit fees and costs are different and whether these relations differ between audit fees and costs. We find that recognized finance leases are associated with audit fees while disclosed finance leases are not. Moreover, the associations between recognized versus disclosed finance leases and audit fees are substantially different. However, neither recognized nor disclosed finance leases are associated with audit costs, and recognized and disclosed finance leases have similar associations with audit costs. These results suggest that audit effort does not differ between recognized and disclosed finance leases and that a risk premium is charged to recognized finance leases relative to disclosed finance leases. Our results are not consistent with the view that investors’ differential treatments between recognized and disclosed items are due to the reliability of accounting information. This study makes contributions to the accounting literature on recognition versus disclosure and has implications for the global convergence of accounting standards.
    Keywords: Recognition versus Disclosure, Finance Leases, Audit Fees, Audit Costs
    JEL: M41 M42 M48
  2. By: Atanasov, Atanas
    Abstract: Репутацията като обект на счетоводството винаги е била предмет на множество дискусии и така е придавала облик на цялата тема за бизнескомбинациите. Дебатът за същността й, започнал в публикациите на авторите от края на 19 век, преминава през нормативното й регламентиране и продължава с пълна сила до днес. Целта на дисертационния труд е да се извърши критичен преглед на теоретичните аспекти на търговската репутация и развитието на нормативното й регламентиране, както и да се разкрият съществени проблеми при признаването, оценяването и оповестяването на търговската репутация във финансовите отчети на българските публични предприятия, участващи при формирането на борсовия индекс BGBX 40 и на тази основа да се изведат насоки за подобряване на отчитането, представянето и оповестяването й. Като резултат от проведеното изследване е обобщено, че съществуващите правила, залегнали в МСС/МСФО, от една страна са свързани с изпълнението на прекалено сложни процедури при практическото им реализиране, а от друга – дават възможност за проява на относително високо ниво на субективност от страна на ръководствата на предприятията при оценяването на репутацията. Установените слабости по отношение на информацията относно репутацията във финансовите отчети, са основание да се застъпва тезата, че е необходима промяна в режима на последващо отчитане на репутацията. Формулирани са конкретни предложения за подобряване на оповестяванията и са разработени примерни модели за оповестяване при действащия режим на отчитане в приложимите МСС/МСФО. Те имат за цел подобряване на качествените характеристики и повишаване на информационната стойност за потребителите на финансовите отчети. Goodwill has been a central topic in accounting for many years. It has always been the subject of many discussions and thus has given the whole face of business combinations. The debate about its essence, which began in the publications of the authors of the late 19th century, goes through its normative regulation and continues to its full force today. The purpose of this dissertation is to make a critical review of the theoretical aspects of goodwill and the development of its normative regulation, as well as to reveal significant problems in the recognition, assessment and disclosure of goodwill in the financial statements of Bulgarian public enterprises involved in the formation of the BGBX 40 index and, on that basis, to provide guidance on how to improve its reporting, presentation and disclosure. As a result of the research, it is concluded that the existing rules set out in the IAS / IFRS, on the one hand, are related to the implementation of overly complex procedures in their practical implementation and, on the other hand, allow for a relatively high level of subjectivity of the management of the enterprises in the evaluation of goodwill. The weaknesses identified with regard to goodwill in the financial statements are grounds for arguing that there is a need to change the subsequent reporting regime of goodwill. Specific suggestions to improve disclosures have been formulated and exemplary disclosure models have been developed under the current reporting regime in the applicable IAS / IFRS. They aim to improve the quality characteristics and increase the information value for the users of the financial statements.
    Keywords: Goodwill Accounting, Impairment, Amortisation, Public enterprises, IFRS
    JEL: M14 M41
    Date: 2018–04
  3. By: Jennifer Bruner; Dylan G. Rassier; Kim J. Ruhl
    Abstract: Profit shifting to low-tax countries imposes challenges for the treatment of multinational enterprises in economic accounts. Using adjustments for profit shifting calculated in Guvenen et al. (2017) under an alternative measurement methodology, this paper empirically demonstrates how the effects of profit shifting cascade throughout a fully articulated set of economic accounts for the United States in 2014. We find a 1.5 percent and 3.5 percent increase in measured U.S. gross domestic product and operating surplus, respectively, and a 33.5 percent decrease in measured income receivable from the rest of world. As a result of offsetting effects, measured U.S. gross national saving decreases by 0.8 percent, and national borrowing increases by 6.9 percent. There are also potentially significant implications for analytic uses of the measures, including decreases for the labor share of income and the return on U.S. direct investment abroad and increases for the trade in services balance and the return on domestic non-financial business.
    JEL: E01 F23 H26
    Date: 2018–08
  4. By: Valerio Della Corte (Bank of Italy); Stefano Federico (Bank of Italy); Enrico Tosti (Bank of Italy)
    Abstract: This paper is a case study of an (almost complete) adjustment of Italy’s external stock imbalance. After reaching a peak of around 25 per cent of GDP in early 2014, Italy’s net external debtor position has steadily decreased, reaching less than 7 per cent of GDP at the end of 2017. The contribution of this work is twofold. First, it reviews the main developments in Italy’s net international investment position (NIIP) since 1999. Second, it reports a baseline projection of Italy’s NIIP over a medium-term horizon, as implied by current account balance forecasts. Since this projection ignores the role of valuation adjustments, the study also provides an analysis of their sensitivity to a set of potential movements in exchange rates and equity or bond markets.
    Keywords: international investment position, stock imbalances, valuation adjustments, current account
    JEL: F21 F32 F34 F36
    Date: 2018–07
  5. By: Sebastian Beer; Alexander D Klemm; Thornton Matheson
    Abstract: This paper describes, and where possible tentatively quantifies, likely tax spillovers from the U.S. corporate income tax reform that was part of the broader 2017 tax reform. It calculates effective tax rates under various assumptions, showing among other findings, how the interest limitation and the Foreign Derived Intangible Income provision can raise or reduce rates. It tentatively estimates that under constant policies elsewhere, the rate cut will reduce tax revenue from multinationals in other countries by on average 1.6 to 5.2 percent. If other countries react in line with historical reaction functions, the revenue loss from multinationals rises to an average of 4.5 to 13.5 percent. The paper also discusses profit-shifting, real location, and policy reactions from the more complex features of the reform.
    Date: 2018–07–13
  6. By: Jack Mintz
    Abstract: Tax reform adopted in United States for 1 January, 2018 will have a significant positive impact on the global economy in 2018. The ground-breaking corporate income tax will also substantially affect US tax competitiveness with many provisions drawing both capital and profits to the United States. With the sharply lower corporate income tax rate, dividend exemption system and new limitations on deductible interest, US companies will try to push debt and other costs onto foreign countries, reducing corporate taxes elsewhere. This paper outlines key facts on the corporate tax reform featured in the US Tax Cuts and Jobs Act, assesses the reform with respect to US investment and examines the impacts of interest and loss limitation rules, as well as new US taxes with respect to intangible income.
    Date: 2018
  7. By: Milogolov Nikolai (Gaidar Institute for Economic Policy)
    Abstract: In this paper author compares Russian international tax rules with international “best practice” (incorporated in BEPS deliverables and other OECD and academic reports) with the aim of finding out ways of their improving and development. Main findings include: high level of uncertainty due to existence of distance in applying and interpretation typical international tax concepts (including permanent establishment, VAT place of supply and e-commerce related rules, beneficial owner, transfer pricing and others) between Russia and developed states. Second, some indicators of base erosion were estimated and they showed existence of BEPS behavior in Russia. Third, Russian treaty policy based on concluding OECD-Model treaties and participating in BEPS and implementing new complex anti-abuse rules and recommendations (such as LOB, PPT, CbC, for example) in combination with current court and fiscal practice can harm investment climate and lead to defeat in tax competition game in favor of more developed states
    Keywords: base erosion, profit shifting, distortion of competition, multinational corporations, tax competition, developing country, transitional country, tax policy, transfer pricing, permanent establishment, VAT, e-commerce, OECD, BEPS
    JEL: F23 H25 H26
    Date: 2018

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