nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2019‒07‒22
seven papers chosen by

  1. Methodological provision for the assessment of audit risk during the audit of tax reporting By Victoria Tarasova; Yuri Mezdrykov; Svetlana Efimova; Elena Fedotova; Dmitry Dudenkov; Regina Skachkova
  2. Corporate Governance disclosure and implication in the financial audit of banks in Romania By Andreea Claudia Crucean
  3. Modelling net carrying amount of shares for market consistent valuation of life insurance liabilities By Diana Dorobantu; Yahia Salhi; Pierre-Emmanuel Thérond
  4. The differences of corporate governance influence on state-owned enterprise and non-state-owned entrerprise’s performance: the case of Indonesia By Irine Herdjiono
  5. How Clean is our Taxpayer Register? Data Management in the Uganda Revenue Authority By Mayega, Jova; Ssuuna, Robert; Mubajje, Muhammad; I. Nalukwago, Milly; Muwonge, Lawrence
  6. The cyclicality of loan loss provisions under three different accounting models: the United Kingdom, Spain, and Brazil By A. M. B. Araujo; P. R. B. Lustosa
  7. Evaluation of accounting regulation evolution in selected countries By Rasa Subačienė; Lehte Alver; Inta Brūna; Mirjana Hladika; Daša Mokošová; Jan Molín

  1. By: Victoria Tarasova (PRUE - Plekhanov Russian University of Economics [Moscow]); Yuri Mezdrykov (PRUE - Plekhanov Russian University of Economics [Moscow]); Svetlana Efimova (PRUE - Plekhanov Russian University of Economics [Moscow]); Elena Fedotova (PRUE - Plekhanov Russian University of Economics [Moscow]); Dmitry Dudenkov (PRUE - Plekhanov Russian University of Economics [Moscow]); Regina Skachkova (PRUE - Plekhanov Russian University of Economics [Moscow])
    Abstract: The problematics and the goal of the research: The lack of theoretical foundations as well as the practical necessity for organizations to create a methodology for assessing the audit risk in carrying out the audit of tax reporting, determined the research objective: the development of theoretical and practical recommendations regarding the methodological provision for the assessment of audit risks as well as the methodology for establishing the relationship between the adequate tax reporting and the managerial decisions of owners on the basis of tax audit results. Methods used: a method based on the theory of fuzzy sets and the basics of the theory of information asymmetry. Results achieved: the development of a methodology for assessing an audit risk in carrying out the audit of tax reporting and establishment of relationship between the theory of information asymmetry and the effectiveness of the users' managerial decisions. The conclusions of the research: practical implementation of the methodology in organizations with different taxation systems has proved the relationship between the theory of information asymmetry and optimization of the users' managerial decisions. The practical benefits from the obtained results make it possible to increase the efficiency of organizations' activities and to confirm to the tax authorities the timeliness of the calculation and payment of taxes. These methods are the basis for the development of a theory for assessing audit risks in carrying out tax audits Keywords: methodological provision, qualitative assessment, audit risk, tax audit, tax reporting, asymmetric information.
    Date: 2018–09–30
  2. By: Andreea Claudia Crucean (West University of Timisoara, Romania)
    Abstract: Thispaperaims topresents the relevant aspects regarding the implementation of principles and rulesof corporate governance in the Romanian banking system.The purpose of the articleis to investigate the theoretical and legislative basis whichcontrolsthis area, but also research practical cases on this subject. Based on the review of nationaland international literature, the case study was based on a sample of 17 commercial banks from Romania.Usingcollected data from the official banks' websites, it was analyzed the details of chosen corporate governance elements: the management system, the shareholder and organizational structure, the financial control and audit, as well as if the banks offer disclosure for theapplicable governance codes. The main conclusion which resultsfrom thisstudy case is that,the information available to public provides details about the management structure and the audit department, but this information is not very detailed, the information about the professional experience of the members or the benefits that these credit institutions obtained from the application of corporate governance codes are not described, in some cases even missing.
    Keywords: corporate governance, financial audit, disclosure, banking system, dual system, unitary system
    JEL: G30 M14 M41 M42 M48
    Date: 2019–05
  3. By: Diana Dorobantu (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Yahia Salhi (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Pierre-Emmanuel Thérond (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon)
    Abstract: The attractiveness of insurance saving products is driven, among others, by dividends payments to policyholders and participation in profits. These are mainly constrained by regulatory measures on profit-sharing on the basis of statutory accounts. Moreover, since both prudential and financial reporting regulation require market consistent best estimate measurement of insurance liabilities, cash-flows projection models have to be used for such a purpose in order to derive the underlying financial incomes. Such models are based on Monte-Carlo techniques. The latter should simulate future accounting profit and losses needed for profit-sharing mechanisms. In this paper we deal with impairment losses on equity securities for financial portfolios which rely on instrument-by-instrument assessment (when projection models consider groups of shares). Our motivation is to describe the joint distribution of market value and impairment provision of a book of equity securities, with regard to the French accounting rules for depreciation. The results we obtain enable to improve the ability of projection models to represent such an asymmetric mechanism. Formally, an impairment loss is recognized for an equity instrument if there has been a significant and prolonged decline in its market value below the carrying cost (acquisition value). Such constraints are formalized using an assumption on the dynamics of the equity, and leads to a complex option-like pay-off. Using this formulation, we propose analytical formulas for some quantitative measurements related the impairments losses of a book of financial equities. These are derived on a general framework and some tractable example are illustrated. We also investigate the operational implementation of these formulas and compare their computational time to a basic simulation approach.
    Keywords: Insurance,Impairment Losses,Joint Density *,Correlated Brownian Motions,Best Estimate Technical Provision
    Date: 2019
  4. By: Irine Herdjiono (Economy and Business Faculty, MusamusUniversity in Indonesia)
    Abstract: This research aims to analyze the influence of audit committee, institutional ownership, and managerial ownership towards company’svalue. Moreover, it also analyzes the differencesof influenceon state-owned enterprise (SEO)and non SEO companieswhich are registered in Indonesian Stock Exchange. The sample consists of 48 SEO companies and 36 non SEO companiesin Indonesian Stock Exchange. Purposing sampling method is used in this research. The used technique data analysis is linear regression. The result of this research shows that audit committeehassignificant influence on SEO value, while in non SEO it does not influenceperformance. In SEOcompanies, institutional ownership does not influence company value while in non SEOcompany it does. Managerial ownership does not show any influenceson both SEOand non SEOcompanies. This research is the first research which compares the impact of corporate governance implementation on Indonesia SEOand non-SEOcompanies’value. This research implies that strengtheningcorporate governance aspects between SEOand non SEOcompaniesin order to increase the company’svalueis needed.
    Keywords: corporate governance, audit committee, institutional ownership, managerial ownership
    JEL: D4 G30
    Date: 2019–05
  5. By: Mayega, Jova; Ssuuna, Robert; Mubajje, Muhammad; I. Nalukwago, Milly; Muwonge, Lawrence
    Abstract: Revenue administrations collect large amounts of data on individuals and firms in the course of their work. Increasingly, this data is digitised. The use of digital technologies has the potential to greatly improve the efficiency and effectiveness of tax administration, by: Reducing the cost of routine operations for both taxpayer and tax collector; Reducing the need for face-to-face interactions between taxpayers and tax collectors,thereby shrinking opportunities and incentives for collusion and corruption; Making it possible to select taxpayers for audit easily and cheaply on the basis of riskanalysis; Opening up new opportunities to undertake statistical analysis to assess theeffectiveness of existing operational procedures, and to design improvements. The Uganda Revenue Authority (URA) uses automated digital processes to a higher degree than most tax administrations in Africa. These processes nevertheless suffer from a range of problems. We report here on an assessment that the URA undertook of one important aspect of its own data management practices: the management and accuracy of one of its most important data bases, the taxpayer register. We discovered considerable problems of inaccurate data and, primarily as a result of the activities of tax agents, a high level of duplication of the same telephone numbers and email addresses, and possession of multiple taxpayer identification numbers. These inaccuracies reflect a number of factors, including inadequate design of registration forms and procedures, and the low priority given to verification and the accuracy of the register.
    Keywords: Economic Development, Finance, Governance,
    Date: 2019
  6. By: A. M. B. Araujo; P. R. B. Lustosa
    Abstract: A controversy involving loan loss provisions in banks concerns their relationship with the business cycle. While international accounting standards for recognizing provisions (incurred loss model) would presumably be pro-cyclical, accentuating the effects of the current economic cycle, an alternative model, the expected loss model, has countercyclical characteristics, acting as a buffer against economic imbalances caused by expansionary or contractionary phases in the economy. In Brazil, a mixed accounting model exists, whose behavior is not known to be pro-cyclical or countercyclical. The aim of this research is to analyze the behavior of these accounting models in relation to the business cycle, using an econometric model consisting of financial and macroeconomic variables. The study allowed us to identify the impact of credit risk behavior, earnings management, capital management, Gross Domestic Product (GDP) behavior, and the behavior of the unemployment rate on provisions in countries that use different accounting models. Data from commercial banks in the United Kingdom (incurred loss), in Spain (expected loss), and in Brazil (mixed model) were used, covering the period from 2001 to 2012. Despite the accounting models of the three countries being formed by very different rules regarding possible effects on the business cycles, the results revealed a pro-cyclical behavior of provisions in each country, indicating that when GDP grows, provisions tend to fall and vice versa. The results also revealed other factors influencing the behavior of loan loss provisions, such as earning management.
    Date: 2019–07
  7. By: Rasa Subačienė (Vilnius University [Vilnius]); Lehte Alver (TTÜ - Tallinn University of Technology); Inta Brūna (LU - University of Latvia); Mirjana Hladika (University of Zagreb); Daša Mokošová (University of Economics in Bratislava); Jan Molín (University of Economics [Prague])
    Abstract: Accounting forms a significant part of information on any enterprise and plays the most important role in different levels of enterprise' management as well as in country's. Accounting information is used by various information users, whose decisions may influence various spheres: from performance of enterprises to proceeding the state policy. Its role increased recently under conditions of modern global and competitive market economy, and will be increasing in the future. Importance of accounting information usage highlights the need of appropriate formation of such information. And accounting regulation plays the main role in the process of formation and presentation of accounting information as it determines requirements for accounting methodology, information performed in the single set of financial statements or consolidated financial statements. The purpose of the research is to evaluate evolution of accounting regulation for the period 1990-2017 and distinguish accounting regulation evolution phases and factors, which influenced development of the phases. Six countries, which are members of the European Union-the Republic of Croatia, the Czech Republic, the Republic of The International Journal ENTREPRENEURSHIP AND SUSTAINABILITY ISSUES 140 Estonia, the Republic of Latvia, the Republic of Lithuania and the Slovak Republic-were chosen for the evaluation of accounting evolution. For the research were used legislation analysis, systematisation, inductive and deductive, comparison and summary of information methods. Research results show, that evolution of accounting regulation in analysed countries may be distinguished in four general phases. The period of evolution started at the beginning of nineties (1990-1992) when the countries transformed from a central planned economy to market economy, this phase was followed by other phases (1993-2001-2005), when laws on accounting and additional legislation were issued. Accounting regulation evolution phase for alignment accounting legislation with Fourth and Seventh EU Directives started from 2002/2006 and the phase of the compliance with requirements of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013, which started in all analysed countries in 2016, except Slovakia-in 2014, completes the accounting regulation evolution period till present.
    Keywords: accounting,development of accounting,accounting regulation,the
    Date: 2018–09–30

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