nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒08‒31
seven papers chosen by

  1. Albania; Technical Assistance Report-Revenue Administration: Supporting the Delivery of the Reform Agenda By International Monetary Fund
  2. Pareto-Improving Reforms of Tax Deductions By Sebastian Koehne; Dominik Sachs
  3. Kenya; Fiscal Transparency Evaluation Update By International Monetary Fund
  4. Montenegro; Technical Assistance Report-Financial Soundness Indicators Mission (November 29 - December 5, 2017) By International Monetary Fund
  5. West African Economic and Monetary Union (WAEMU); Staff Report on Common Policies for Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the WAEMU By International Monetary Fund
  6. Liquidity requirement and banks' lending By Okahara, Naoto
  7. December Fever in Public Finance By Vera Eichenauer

  1. By: International Monetary Fund
    Abstract: This Technical Assistance Report discusses several tax administration issues and high-level recommendations for the reform agenda. The General Directorate of Taxes (GDT) continues to make good progress in modernizing its administration of the taxation system. A program to consolidate some core functions into fewer regional locations, beginning with the arrears collection function, should be accelerated. The GDT’s increased use of electronic services and telephone contact centers reduces the need for face-to-face contact with taxpayers. The GDT must have access to a broader range of third-party information, and data-warehouse facilities to manage the risk assessment with automated analytical tools. There are some positive developments in the audit function; however, further capacity building is necessary. A new comprehensive desk audit manual has been developed, which will help to standardize operations and provide more appropriate case allocation based on auditor experience and skills.
    Keywords: Tax revenue;Tax evasion;Revenue sources;Tax administration;Tax reforms;GDT,LTO,arrears,vat,taxpayer
    Date: 2019–04–02
  2. By: Sebastian Koehne; Dominik Sachs
    Abstract: We analyze Pareto-efficient tax deduction rules for work-related expenses. Pareto efficiency dictates a strict rule for marginal deductions along the income distribution. An immediate implication is a recipe for designing Pareto-improving reforms. We apply our theory and simulate a Pareto-improving reform that introduces deductions for non-care household services (housekeeping, gardening, laundry) in the United States. The reform combines marginal deduction rates for household services between 55% and 85% with a slight increase in marginal tax rates.
    Keywords: optimal taxation, tax deduction, Pareto-improving tax reform
    JEL: D82 H21
    Date: 2020
  3. By: International Monetary Fund
    Abstract: This Fiscal Transparency Evaluation (FTE) assesses the quality of fiscal reporting in Kenya against the principles set out in the Fiscal Transparency Code. Kenya has experienced a lot of structural and economic changes since 2014. One of the key objectives of this FTE is to estimate Kenya’s balance sheet, and to cover as many as possible of the entities in the public sector. The coverage of Kenya’s reporting of fiscal statistics has improved considerably. The report discusses that Kenya continues to perform well in the overall transparency of its fiscal forecasting and budgeting practices (Pillar II of the Code), which is based on a strong legal framework. It does so against a backdrop of significant ongoing reforms, including far-reaching fiscal devolution to counties, and the introduction of performance-based budgeting. A recent important change in the law is expected to synchronize the submission and approval of the government’s spending proposals and the tax measures in the Finance Bill. The recommendations set out under each of the pillars of this report aim to address several challenges. The report also encourages the authorities to continue with the implementation of the recommendations set out in the 2014 report, on which good or satisfactory progress has been made in about half the cases.
    Keywords: Financial soundness indicators;Financial management information systems;Economic policy;Fiscal policy;Fiscal indicators;ISCR,CR,consolidated financial statement,tax expenditure,PPPs,percent of GDP,pending bill
    Date: 2020–01–15
  4. By: International Monetary Fund
    Abstract: This Technical Assistance (TA) report focuses the compilation of financial soundness indicators (FSI) for the deposit takers (DTs), which cover 15 commercial banks, using the chart of accounts (COAs) and supervisory series as source data. The regulatory and accounting practices of the DTs are broadly in line with the FSI Guide, which defers to Basel principles and International Accounting Standards. The mission recommended an action plan with the following priority recommendations to support progress in the FSI compilation. The mission highlighted the need to complement the FSI data with the corresponding metadata. Metadata should also contain information on the content and coverage of the FSIs, as well as the accounting conventions and other national guidelines. As the financial performance of commercial banks’ counterpart sectors as well as key markets has direct impact on the soundness of the financial sector, it is recommended to coordinate with regulators of other financial institutions that are not under the Central Bank of Montenegro’s supervision to draw a work program to collect data for compiling FSIs for other financial corporations.
    Keywords: External sector statistics;Systemic risk assessment;Insurance companies investments;Financial statistics;Pension funds;FSI,DTs,source data,CBM,FSD
    Date: 2019–03–14
  5. By: International Monetary Fund
    Abstract: This regional consultation IMF staff report for West African Economic and Monetary Union (WAEMU) highlights that growth remained strong in 2018, the fiscal deficit narrowed by 1/2 percentage point of GDP, external reserves increased, and important banking reforms were put in place, including the introduction of Basel II/III standards. The medium-term outlook remains positive despite somewhat less favorable global conditions, but critically hinges on planned fiscal consolidation and structural reforms to improve competitiveness and allow the private sector to become the main engine of growth. Other risks relate to terms-of-trade and weather shocks, and a difficult security situation in some countries. The report also discusses that collectively adhering to fiscal consolidation commitments, with a greater focus on domestic revenue mobilization and more effective control of below-the-line operations, is essential to lower risks of public debt distress, support international reserves, and preserve external viability. Structural policies aimed at improving competitiveness and growth inclusiveness are critical to reducing vulnerabilities to external shocks, building external buffers, stimulating private-sector-led growth, and making the growth momentum sustainable.
    Keywords: Central banks;Bank accounting;Monetary policy;External sector;Credit;WAEMU,BCEAO,Basel II,Eurobond,member-countries
    Date: 2019–03–29
  6. By: Okahara, Naoto
    Abstract: This study proposes a model that describes banks' decisions about how much liquidity they hold and analyzes how liquidity regulations affect the amount of their lending. In literature, it is pointed out that banks are likely to hold ex-post excess liquidity under a liquidity regulation when some depositors make decisions based on the banks' soundness. This result implies that the regulation forces banks to suffer an unnecessary decrease of their lending, and thus, they would try to mitigate the loss by adjusting their portfolio. The aim of this study is to investigate whether banks' lending decreases or not when there exist multiple sets of assets that satisfy a liquidity regulation. In addition, we analyze two types of liquidity regulation; one focuses on banks' survivability, and the other focuses on continuity of their liquidity holding. The model shows that, even when there exist other ways to satisfy the regulations besides holding only reserves, banks still hold an ex-post excess amount of liquidity under either type of liquidity regulation. However, the model also shows that the amount of banks' lending varies according to how they satisfy the liquidity regulation and the probability that a severe reduction of lending happens depends partly on the regulation's type. These results implies that banks' decisions for mitigating losses caused by liquidity regulations lead to an undesired outcome, and thus, we consider more carefully banks' decisions under liquidity regulations.
    Keywords: Bank, Liquidity regulation, Excess liquidity
    JEL: E02 G21 G28
    Date: 2020–01–20
  7. By: Vera Eichenauer (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Public spending often increases at the end of fiscal years. This is undesirable because late spending tends to be inefficient. The causes for these spending spikes are however poorly understood. This paper offers a novel identification strategy that relies on the historic variation in countries’ fiscal years to analyze their effect on government disbursements. We show that the end of fiscal years rather than alternative explanations cause spending spikes at the end of fiscal years. Our accounting data includes discretionary contributions of 27 OECD countries to the World Bank from 2002 to 2013 at the daily level. As suggested by the principal-agent theory, we find that the end of year effect is smaller in countries with high administrative quality. We analyze the pertinent budget institutions as possible mechanism. For the first time, we can show that unexpected positive demand shocks decrease year-end spending, a common assumption in the literature. Finally, we revisit the complementary explanations for year-end effects in public spending.
    Keywords: sub-annual spending, fiscal year, year-end spending, bureaucratic quality, public performance, dynamic inefficiency, accounting system, foreign aid, World Bank
    JEL: F35 H50 H61 F53
    Date: 2020–01

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