nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2019‒09‒30
five papers chosen by

  1. Possibilities of identifying distortion of the calculation basis for the payment of dividend on the basis of accounting By Marcela Hradecká
  2. Financial health assesment from the accounting perspective in the case of agriculture By Kristýna Nývltová
  3. Information Revelation Through Regulatory Process: Interactions Between the SEC and Companies Ahead of the IPO By Michelle Lowry; Roni Michaely; Ekaterina Volkova
  4. The Georgian Tax Lottery of 2012. A Multi-Methodological Assessment By Lotta Björklund Larsen; Rubina Arakelyan; Teimuraz Gogsadze; Mariam Katsadze; Sophiko Skhirtladze; Nino Muench
  5. Valuing a Large Public Housing Portfolio Using Mass Appraisal Methods By John Macfarlane

  1. By: Marcela Hradecká (Department of Accounting and Finances, Faculty of Economics, University of South Bohemia In České Budějovice)
    Abstract: Financial earning from dividends and profit shares are important income for the owners. From the business corporation perspective is the setting of dividend policy important for keeping the financial stability and solvency of the corporation. The most important indicator of the financial performance of the corporation is the profit reached. Czech accounting rules allow to account some revenue and expenses of on the basis of estimates so that all expenses and revenue are accounted in the period which is related in matter and time. These items are often a means for creative distortion of the economic result with the aim to reach the required level of covenants that lead to payment of benefits, directors rewards and annuals rewards for the management and also for the overvaluating of the economic result as one of the variables for the calculation base for the payment of dividends. Current legislation for setting the calculation base for the payment of dividends is not satisfactory and does not protect against disproportional outflow of financial means in the form of dividends for the owners. The paper concentrates on the possibility of identifying the distortion of the calculation base for the payment of dividends and on the proposal of a modification of the calculation base for the payment of dividends which would respect the legal right of the owners but also protect the financial stability of the business corporation and ensure its growth during its existence and to limit the outflow of money abroad. Key words: calculation base for the payment of dividends, net profit, payment ratio, modified reporting, NTEDP (net total earning for dividend payments), tests of profitability and own capital, accounting.
    Keywords: calculation base for the payment of dividends, net profit, payment ratio, modified reporting, NTEDP (net total earning for dividend payments), tests of profitability and own capital, accounting
    JEL: G30 G32 M41 M42
    Date: 2019–09
  2. By: Kristýna Nývltová (Department of Accounting and Finances, Faculty of Economics, University of South Bohemia In České Budějovice)
    Abstract: Agriculture is a very specific field. These specifics cannot be entirely covered by accounting legislation Due to this fact, some accounting items or information that are included in the financial statements may be affected and thus can be also the assessing the financial health of an enterprise affected. The main objectives of the paper are to determine problematic accounting areas in agriculture arising both from the specifics of the given field and the legislative solution of some accounting cases and to assess their impact on the financial statements. The analysis of problematic areas is followed by the application, which evaluates the impact of these areas on the values of selected entries recorded in the financial statements. For the analysis, 163 data records of 64 Czech small and medium agricultural companies was available. To achieve this analysis a paired t-test was used, including analysis of normal distribution assumptions. By using pair t-test, differences in accounting solutions of problematic areas, namely investment subsidies, the lease for the tenant, valuation of the land and the old and new accounting solution of changes in stocks were demonstrated. In all analysis, there is statistically significant difference between currently used method and the proposed method of accounting solution of problematic areas. Despite the statistically significant difference, the total difference of the values of the available data is small. The reason can be the testing of small and medium-sized businesses. The aim is to include large companies as well in the following analysis.
    Keywords: Accounting, Agriculture, Financial health assessment, Accounting legislation, Specifics of business field
    JEL: M4 Q1 G3
    Date: 2018–07
  3. By: Michelle Lowry (Drexel University); Roni Michaely (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute); Ekaterina Volkova (University of Melbourne - Faculty of Business and Economics)
    Abstract: The regulator plays an active role in the IPO process via its pre-IPO communications with firms, writing 3.8 comment letters per company. To evaluate the regulator’s input, we analyze these communications between the SEC and firms using LDA-analysis and KL-divergence. Main topics of SEC concerns map closely into the regulator’s stated mandate: companies increase prospectus disclosures within precise topics of SEC concern. Questions related to revenue recognition are most informative about company valuation. These concerns are not independently uncovered by investors. This dynamic process of information disclosure results in increased transparency, but at a cost of delays in going public.
    Keywords: Regulation, IPO, Disclosure
    JEL: G30 G24 G28
    Date: 2019–09
  4. By: Lotta Björklund Larsen (TARC (Tax Administration Research Centre) at University of Exeter Business School); Rubina Arakelyan (ISET - International School of Economics at Tbilisi State University); Teimuraz Gogsadze (ISET - International School of Economics at Tbilisi State University); Mariam Katsadze (ISET - International School of Economics at Tbilisi State University); Sophiko Skhirtladze (ISET - International School of Economics at Tbilisi State University); Nino Muench
    Abstract: Tax lotteries are seen as ways to relatively easily augment public revenue while also increasing compliance. Tax lotteries are constructed so that consumers are nudged to ask for a receipt when making a purchase. This receipt contains information so that it can also be used as a lottery ticket with the possibility of winning prizes. Such tickets also leave traces of transaction records so that revenue authorities can audit vendors. Given this background, the aim of this paper is to provide a broad, multi-methodological and socio-economic assessment of Georgia’s tax lottery experience in 2012. Our assessment aims to describe the design of the lottery and its functioning in practice, to evaluate how the introduction of the tax lottery influenced the effectiveness of tax administration in Georgia at the country, regional, and firm level and to investigate Georgian citizens’ views of the Georgian Revenue Service (GRS) and if tax compliance was improved by the tax lottery. Economic assessment, based on data from 2012 and 2013 on weekly transactions per cash register, using three econometric specifications show that during the lottery weeks, there is a significant increase in the aggregate weekly sales compared to the non-lottery weeks. The number of cash registers reporting their income and the average weekly sales are also higher in lottery weeks. Thus, there are proper foundations to argue that the lottery propelled the increase in reported income. But this tax lottery also aimed to popularize the cash registers as well as to improve citizens’ attitude towards the GRS. Following our qualitative investigation and assessment into the Georgian Tax Lottery we would like to add the following points. GRS achieved its purpose, at least in the short term. More revenue was collected and vendors became very conscious and aware of printing and giving receipts to customers. However, what the impact became in the long run, is harder to say. Strategies of “love and fear” are difficult to make work in combination, and we find it hard to say that citizens’ views of the GRS improved. Perhaps even the contrary could be proposed.
    Keywords: Tax Lottery, Tax Evasion, Interdisciplinary Tax Study
    Date: 2019
  5. By: John Macfarlane
    Abstract: Public Housing Authorities are required to account for the financial performance and condition of their property portfolio on a regular basis. In Australia, where property and housing are largely the responsibility of State Governments rather than the Federal Government, public housing represents a significant proportion of a State’s asset base. As such, regular (annual), accurate and reliable portfolio values are required. Under international accounting and valuation standards, market values – not nominal replacement values based on costs – are required; even though most properties in the portfolio are not immediately marketable. Values (Land, Building and Rental) of individual properties, and groups of properties, are also required to effectively manage the portfolio.In New South Wales (NSW), the State Government housing portfolio (of 150,000+ dwellings) is managed by the Land and Housing Corporation (LAHC). The value of this portfolio is approaching $A 50b ($US 36b).How should such portfolio valuation and assessment tasks be undertaken to be able to make portfolio estimates to a given level of accuracy at a minimal cost; while also maximising the quality of valuation information at the individual property level?As this is an annual exercise, how can the rolling cycle of valuations be constructed to ensure quality improvement over time?These questions and related issues will be examined in the paper.
    Keywords: asset valuation; Mass Appraisal; Public Housing Portfolio; Quality Assurance
    JEL: R3
    Date: 2019–01–01

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.