nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒09‒07
eleven papers chosen by

  1. Republic of Armenia; Technical Assistance Report-Public Investment Management Assessment By International Monetary Fund
  2. Somalia; Technical Assistance Report-Internal Audit and Accounting Training for the Central Bank of Somalia By International Monetary Fund
  3. Argentina; Technical Assistance Report-Technical Assistance Mission on External Sector Statistics (November 14-25, 2016) By International Monetary Fund
  4. Corporate taxes and high-quality entrepreneurship: evidence from a tax reform By Ana Venâncio; Victor Barros; Clara Raposo
  6. Bosnia and Herzegovina; Technical Assistance Report-Report on Government Finance Statistics Technical Assistance Mission By International Monetary Fund
  7. Theoretical and empirical approaches to assessing the optimality of the taxation system in the Russian Federation By Belev, Sergey (Белев, Сергей); Sokolov, Ilya (Соколов, Илья); Suchkova, Olga (Сучкова, Ольга); Leonov, Elisey (Леонов, Елисей); Khuzina, Alfiya (Хузина, Альфия); Vekerle, Konstantin (Векерле, Константин); Matveev, Evgeniy (Матвеев, Евгений)
  8. The impact of internet penetrationon corporate income tax filing in South Africa By Lediga, Collen
  9. An assessment of wealth taxes in a joint income-wealth perspective By Sarah Kuypers; Francesco Figari; Gerlinde Verbist
  10. Senegal; Fiscal Transparency Evaluation By International Monetary Fund
  11. Unveiling the directional network behind the financial statements data using volatility constraint correlation By Tomoshiro Ochiai; Jose C. Nacher

  1. By: International Monetary Fund
    Abstract: This paper discusses results of a technical assistance report prepared to evaluate the quality of Armenia’s public investment institutions in the planning, budgeting, and implementation stages of public investment management. Significant gaps exist in the efficiency of public investments, both in terms of physical outputs and quality. The report also highlights that in a context of limited fiscal space, the scaling up of public investments will require the prioritization of efforts to introduce reforms in the following areas in need of urgent action. The recommendations in this report prioritize the eight actions at the key stages of the project cycle and for the Ministry of Finance’s capacity development. Recommendation is also made to establish a constraint on in-year changes in project implementation plans and complete the transformation of the Audit Chamber from the Control Chamber. Armenia is expected to have a more robust audit function when the provisions in the new Law on the ‘Audit Chamber’ are fully implemented.
    Keywords: Accounting standards;Accounting systems;Accrual accounting;Audit process;Auditing;Bank accounting;Budget approval;Budget classification;Budget deficits;Budget execution;Budget financing;Budget preparation;Budget programs;Budget reporting;Budget support;Budgetary process;Budgeting;Budgeting for investments;Budgets;Capital;Capital budget;Capital expenditure;Capital revenue;Capital stocks;Cash management;Central banking;Central banks;Commercial banks;Commodity prices;Consumption;Contingent liabilities;Crowding out;Current expenditure;Debt;Debt management;Debt reduction;Debt service;Debt sustainability;Depreciation;Development;Development financing;Development planning;Development plans;Development strategy;Economic analysis;Economic functions;Economic growth;Economic indicators;Economic sectors;Economic stabilization;Emerging markets;Energy resources;Energy sector;Exchange rate depreciation;Exchange rates;Expenditures;External audit;External borrowing;Financial analysis;Financial crises;Financial infrastructure;Financial management information systems;Fiscal framework;Fiscal policy;Fiscal projections;Fiscal reporting;Fiscal risk;Fiscal rules;Fiscal transparency;Functional classification;Fund reserves;Government accounting;Government expenditures;Government finance statistics;Gross domestic product;Health indicators;Human capital;Inflation;Infrastructure;Institutional framework;Internal audit;Investment;Legislation;Market economies;Military expenditures;Money;National accounts;National budgets;Performance audit;Poverty;Prices;Private investments;Private sector;Production;Program budgeting;Program classification;Public corporations;Public debt;Public finance;Public investments;Public procurement;Public sector;Public services;Public welfare;Public-private partnership;Recurrent budget;Revenue sources;Social benefits;Social welfare programs;Statistics;Sustainable development;financed project,PPPs,outturn,percent of GDP,public investment
    Date: 2019–01–29
  2. By: International Monetary Fund
    Abstract: The CBS has taken steps to establish important pillars of a proper policy framework for financial reporting, auditing, and internal controls by approving the Internal Audit and Audit Committee Charters and is committed to address the remaining shortcomings in these areas. The Internal Audit Department (IAD) has made progress by initiating risk assessments of the various CBS business units and recruiting an Information Technology (IT) professional to join the team. The Accounting and Finance Department (AFD) is making progress in implementing accrual accounting, and accounting for foreign exchange operations (International Accounting Standard (IAS) 21), and has created a new role of Reconciliation Officer to ensure all cash transactions are recorded properly. However, the IAD functions without a director, which places the internal audit staff at a severe disadvantage to other departments and limits their authority to effectively implement their program. Also, while the mission team has stressed the importance of adopting International Financial Reporting Standards (IFRS) during this mission and the previous mission, the CBS has not formally indicated that it will adopt this framework.2 High priority recommendations were made to address these shortcomings. See Table 1 for homework assignments and high priority tasks.3
    Keywords: Technical assistance missions;Internal audit;Accounting;Technical Assistance Reports;Central bank accounting;Financial statements;Central bank operations;Accounting policy;audit,account policy,IFRS,risk assessment,business department
    Date: 2019–01–25
  3. By: International Monetary Fund
    Abstract: At the request of the National Institute of Statistics and Censuses (INDEC), a technical-assistance mission on external-sector statistics (ESS) visited Buenos Aires on November 14–25, 2016. Currently, INDEC’s National Directorate for International Accounts (DNCI) compiles and disseminates ESS following the guidelines of the fifth edition of the Balance of Payments Manual. The mission reviewed the ESS methodology, data sources, and dissemination policy in order to help enhance its quality and to assist compilers in migrating the methodology to the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). The main data sources used to compile the current account and the capital account (excluding investment income, which is compiled along with the financial account and the IIP) are customs records, corporate surveys, the international-tourism survey, accounting information available to the public, administrative records, and information concerning the exchange balance disseminated by the Central Bank of Argentina (BCRA). The mission found data sources and compilation procedures to be sound. Although the mission identified improvements that could add to the quality of certain estimates, the balances of the current and capital accounts are expected to remain substantially unchanged.
    Keywords: Technical assistance missions;External sector statistics;Current account;Balance of payments statistics;Technical Assistance Reports;Balance of payments;Development;International investment position;Mutual funds;BCRA,IIP,ESS,foreign asset,custom record
    Date: 2019–01–24
  4. By: Ana Venâncio; Victor Barros; Clara Raposo
    Abstract: We examine the impact of corporate taxation on entrepreneurship, using a quasi-natural experiment, which substantially reduced the corporate tax rate for start-ups located in inland municipalities in Portugal. The combination of a high quality and universal firm level database for Portugal allows the detailed study of firm's behaviour. We use BPlim’s harmonized Central Balance Sheet panel for the period of 2006 to 2015 to evaluate the different behaviour of exporters and non-exporters in Portugal. We follow on the self-selection and learning-by-exporting literature, estimating several exporter productivity premiums. After finding solid evidence of a productivity advantage of exporters compared to non-exporters, which seems to emerge several years before firms start to export, we expand our study in order to explore the causality of the previous findings. Thus, we estimate a logit fixed effects model to assess the impact of several variables in the export propensity of a firm. We corroborate the self-selection theory, given the significance of labour productivity in probability of a firm exporting, as well, as significant effects of firm absolute size, relative market share, sector concentration and investment.
    Keywords: Firm entry; Job creation; Tax policy; Corporate taxes; High-quality entrepreneurship
    JEL: H24 H26 J24 L26 M13 H25
    Date: 2020–01
  5. By: Abhishek Ranga
    Abstract: The shifting from IGAAP to Ind AS has resulted in a change in accounting for intangible assets, earlier accounting standard on intangible assets (IGAAP AS-26) prescribe amortization of intangible assets. In contrast, new accounting standards (particularly, Ind AS-38) prescribes annual amortization only for intangible assets with a definite life and annual impairment testing for intangible assets with an indefinite life. Thereby this transition has resulted in a change in the accounting treatment of 'Brand.' The purpose of the current study is to provide evidence of the extent of compliance concerning the disclosure requirements of brand impairment testing as per Ind-AS 36 Key Words:brand, brand impairment, brand impairmenttesting, testing, disclosure, compliance Policy
    Date: 2020–03
  6. By: International Monetary Fund
    Abstract: This technical assistance report (TA) report specifies mission’s efforts to support the Bosnia and Herzegovina authorities, with a specific focus on the Republic of Srpska (RS), in improving government finance statistics (GFS) for decision making. This mission’s focus has been to continue developing reconciliation processes, to develop a compilation process for nonbudgetary public sector units, and to discuss classification questions in context of GFS compilation per the European System of National and Regional Accounts 2010 and the Government Finance Statistics Manual 2014. This mission initiated the development of a standardized compilation procedure for nonbudgetary public sector units, and, more specifically extra-budgetary units. The August 2017 mission mapped out flows between the budget, the health fund, the health institutions, and patients (household), concerning the provision of health care and its funding. This mapping is expected to help serve the classification of functional expenditure of the health fund and the health care providers.
    Keywords: Bosnia and Herzegovina;Europe;Real sector;Financial statements;Accounting reporting;Accounting standards;Balance sheets;GFS,reconciliation process,extrabudgetary,COA,financial statement
    Date: 2019–02–04
  7. By: Belev, Sergey (Белев, Сергей) (The Russian Presidential Academy of National Economy and Public Administration); Sokolov, Ilya (Соколов, Илья) (The Russian Presidential Academy of National Economy and Public Administration); Suchkova, Olga (Сучкова, Ольга) (The Russian Presidential Academy of National Economy and Public Administration); Leonov, Elisey (Леонов, Елисей) (The Russian Presidential Academy of National Economy and Public Administration); Khuzina, Alfiya (Хузина, Альфия) (The Russian Presidential Academy of National Economy and Public Administration); Vekerle, Konstantin (Векерле, Константин) (The Russian Presidential Academy of National Economy and Public Administration); Matveev, Evgeniy (Матвеев, Евгений) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: This article presents the main results of research on the topic of theoretical and empirical approaches to assessing the optimality of the tax system in the Russian Federation. The paper provides an overview of international practice of analyzing the effectiveness of tax expenditures. The optimal tax system is based on three basic principles: efficiency (understands how to reduce losses for all individuals with given revenues to the budget), justice (understands how to reduce losses from taxation among individuals) and the quality of services and the inevitability of tax payments. In the framework of this work, according to these criteria, the main types of taxes and excise taxes in the Russian Federation will be analyzed.
    Date: 2020–04
  8. By: Lediga, Collen
    Abstract: Tax administrations around the world have introduced e-filing of tax returns due to its potential to improve tax return filing compliance. The introduction of this service for businesses in South Africa has not yielded the expected results. Drawing on tax administrative data on tax return filing and population census data, the study aims at determining whether internet access in the country, could have contributed to the less impact of the introduced administrative intervention. Accounting for specific characteristics of the areas in the country, and geoclassication (urban or rural area), we find that an increase in the fraction of household areas with internet access by 10 percentage points, raises the fraction of businesses that do submit a tax return by 1.86 percentage points. The results of the analysis highlights that the impact of the introduction of e-filing services for tax returns submission, is dependent on the internet coverage of the area.
    Keywords: corporate taxation,e-filing,less developed countries,tax administration
    JEL: H2 H7
    Date: 2020
  9. By: Sarah Kuypers; Francesco Figari; Gerlinde Verbist
    Abstract: Over the last decades many researchers and policymakers have made strong arguments for broadening the taxes on wealth and its returns. Although the theoretical literature on (optimal) wealth taxation is growing, there exists a large void in empirical research. In this paper we address this void by analysing the redistributive and budgetary impact of wealth taxes in six European countries. We use data from the Eurosystem Household Finance and Consumption Survey (HFCS) which have been included in the tax-benefit model EUROMOD. In a first step we analyse wealth taxes against their main tax base, i.e. net wealth. In a second step we adopt a more integrated perspective by studying taxes on income and wealth jointly and assessing their redistributive effects against a broader measure of ability to pay, i.e. the joint distribution of income and wealth. We show that existing wealth taxes do not achieve any significant redistribution. Although they are in most cases strongly progressive, the low redistributive effect is mainly due to their small size. Moreover, there is a lack of neutrality in the tax system with regard to the source from which households draw their financial living standard, income or wealth. Hence, existing wealth taxes score badly on both vertical and horizontal equity grounds.
  10. By: International Monetary Fund
    Abstract: This paper discusses results of a fiscal transparency evaluation (FTE) in Senegal. This evaluation puts forward a number of recommendations that would enable Senegal to continue to improve its fiscal transparency while strengthening the fiscal risk management framework. The recommendations relate to five objectives and are accompanied by an Action Plan. Practical examples have been included in the report to back the various recommendations and facilitate their implementation. The paper also highlights that fiscal reporting practices in Senegal can be improved in light of the IMF’s Fiscal Transparency Code. It has been observed that the fiscal and accounting reforms undertaken in the past few years can be expected to enhance fiscal transparency in the medium term. Project appraisal and selection mechanisms have recently been revamped and there is now more information regarding their feasibility available to the general public. The FTE finds that Senegal is positioned at the average level for countries of similar income and institutional capacity.
    Keywords: Public financial management;Fiscal sector;Fiscal policy;Financial crises;National budgets;budget law,WAEMU,social security fund,PPPs,tax expenditure
    Date: 2019–01–30
  11. By: Tomoshiro Ochiai; Jose C. Nacher
    Abstract: Financial data, such as financial statements, stores valuable and critical information to potentially assist stakeholders and investors optimize their capital so that it maximizes overall economic growth. Since there are many variables in financial statements, it is important to determine the causal relationships, that is, the directional influence between them in a structural way, as well as to understand the related accounting mechanisms. However, the analysis of variable-to-variable relationships in financial information by using the standard correlation functions is not sufficient to unveil directionality. Here, we use the volatility constrained correlation (VC correlation) method that enables us to predict the directional relationship between the two variables. To be precise, we apply the VC correlation method to five major financial information variables (revenue, net income, operating income, own capital and market capitalization) of 2321 firms in 28 years from 1990 to 2018 listed on Tokyo Stock Exchange in order to identify which variables are influential and which are susceptible variables. Our findings show that operating income is the most influential variable and market capital and revenue are the most susceptible variables among the five major accounting variables. Surprisingly, the results are different from the existing intuitive understanding suggested by widely used investment strategy indicators known as PER and PBR, which report that net income and own capital are the most influential variable on market capital. Taken together, the presented analysis may assist managers, stakeholders and investors to improve performance of financial management as well as optimize financial strategies for firms in future operations.
    Date: 2020–08

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.