nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒09‒14
eight papers chosen by

  1. Detecting accounting fraud using quantitative techniques By Nirali Singh; Oriol Amat
  2. Do Audits Improve Future Tax Compliance in the Absence of Penalties? Evidence from Random Audits in Norway By Shafik Hebous; Zhiyang Jia; Knut Løyland; Thor Olav Thoresen; Arnstein Øvrum
  3. Ефекти от прилагането на МСФО 15 Приходи от договори с клиенти в част от българските предприятия за периода 2017 – 2018 година By Filipova, Fanya; Georgiev, Venelin; Atanasov, Atanas; Petrova, Reni; Marinova, Rumyana
  4. Ползите от задължително нефинансово отчитане без единна рамка за оповестяване By Atanasov, Atanas
  5. Does greater transparency discipline the loan loss provisioning of privately held banks? By Bischof, Jannis; Foos, Daniel; Riepe, Jan
  6. The Financial Governance of Associations facing with the markets.Towards another accountability model By Pascal Glemain
  7. Forward Looking Loan Provisions: Credit Supply and Risk-taking By Bernardo Morais; Gaizka Ormazabal; José-Luis Peydró; Mónica Roa; Miguel Sarmiento
  8. Welfare Improving Tax Evasion By Canta, Chiara; Cremer, Helmuth; Gahvari, Firouz

  1. By: Nirali Singh; Oriol Amat
    Abstract: This study deals with the detection of accounting fraud from an economic perspective. It is a topic of great relevance since the accounting information of a company is crucial in the decision-making process of different stakeholders. However, very often accounting frauds occurs and have very negative consequences. This motivates the interest in detecting fraud as soon as possible. In this article, we propose the use of a set of accounting fraud detection techniques and they are applied to the case of Ricoh India, a company that had an accounting fraud that caused a great scandal in 2015. The main contribution of the study is the empirical demonstration that it is possible to detect accounting fraud several years before the deception is disclosed to all interested parties. Early detection of the fraud can be of great use to managers, analysts, investors, and supervisors in their desire to avoid the negative consequences of accounting fraud.
    Keywords: Accounts manipulation, accounting fraud, balance Sheet, Income statement, ratios, Z score
    JEL: M41 M42
    Date: 2020–08
  2. By: Shafik Hebous; Zhiyang Jia; Knut Løyland; Thor Olav Thoresen; Arnstein Øvrum
    Abstract: The Norwegian Tax Administration operated multi-year random audits of personal income tax returns. We exploit this exceptional randomized setup to estimate the effects of tax audits on future compliance explicitly distinguishing between dynamic responses of compliant and noncompliant audited taxpayers. A priori, the literature has suggested two competing effects: A post-audit deterrence effect—whereby audits prompt taxpayers to comply in subsequent years—or an “approval effect”—whereby audits lower taxpayers’ subjective probability of detecting future evasion and hence weaken compliance. Our results suggest improved future compliance for five post-audit years by those that were found noncompliant in the audits. Those that were found compliant, however, show no signs of behavioral adjustments. Although the findings are consistent with the deterrence effect, we argue that there is also a “learning” effect with the important implication that better information for taxpayers critically complements tax audits.
    Keywords: tax administration, tax evasion, tax compliance, tax audits, administrative data
    JEL: H26 C23
    Date: 2020
  3. By: Filipova, Fanya; Georgiev, Venelin; Atanasov, Atanas; Petrova, Reni; Marinova, Rumyana
    Abstract: The study focuses on issues related to the implementation of the new IFRS 15 Revenue from Contracts with Customers. The most debatable issues regarding the requirements of the new five-step revenue recognition approach are discussed, as well as the conceptual basis of this approach and its relationship with the IFRS Conceptual Framework and the purposes of the general purpose financial statements. On the basis of manually collected empirical data, two samples of Bulgarian enterprises are examined: the first covers nine firms from different industries (listed on the Large taxpayers and insurers list), and the second – the 4 largest Bulgarian mobile operators. Both quantitative and qualitative approaches are used in order to analyze how IFRS 15 is applied in the sample of companies and the effects of its adoption (on equity and financial results) in the first year of its application – 2018 (as well as the comparative period 2017).
    Keywords: IFRS 15; Telecommunications companies; Contract assets; Contract liabilities; Revenue recognition model; Gray's conservatism ratio; Content analysis; Conceptual framework
    JEL: M41
    Date: 2020
  4. By: Atanasov, Atanas
    Abstract: The purpose of this publication is to provide a critical analysis of the applicability of the European Non-Financial Reporting Directive, and in particular of the non-financial disclosure framework applied. The results of the study, based on a literature review of the specialized literature and analysis of currently applicable reporting frameworks, show a wide range of disclosure frameworks used. On this basis, it is concluded that a single framework for non-financial information disclosure is needed, since the use of multiple disclosure frameworks creates prerequisites for the incompatibility of disclosed information on the one hand and enables the formal fulfillment of the requirements of the European Directive on the other.
    Keywords: non-financial reporting; framework; disclosure; non-financial information; harmonization
    JEL: M14 M21 M41
    Date: 2020
  5. By: Bischof, Jannis; Foos, Daniel; Riepe, Jan
    Abstract: We investigate the relationship between the transparency of loan loss provision disclosures and the provisioning practices of privately held banks. We study a unique change in disclosure regulation under German banking law which introduces mandatory disclosures of loan loss provisions. Using proprietary data provided by the national supervisor, we are able to observe provisioning practices before and after disclosure becomes mandatory. Our findings suggest that bank managers use loan loss provisions to a lesser extent for income smoothing once they are required to disclose their accounting choice. At the same time, provisions become more informative about future loan losses. The change comes in the absence of capital market pressure and highlights the role of depositors and public pressure in the monitoring of bank managers. We exploit cross-sectional variation and show that the change is associated with differences in the local information environment and banks' funding structure.
    Keywords: Loan Loss Provisions,Public Disclosure,Privately Held Banks,Earnings Smoothing,Market Discipline
    JEL: G21 G28 M41 M48
    Date: 2020
  6. By: Pascal Glemain (LIRIS - Laboratoire interdisciplinaire de recherche en innovations sociétales - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes)
    Abstract: In a context of a growing management goal, the associative organizations present a growing appetite to understand and develop their own accounting. Therefore, some of them develop an ambition to meet expectations in accounting accountability that would make them some full-fledged enterprise: associative enterprises. Others, on the contrary, captures their accounting only with a view to more effective management in order to measure the social performance of their supplied service. Through an ongoing exploratory analysis in the field of integration through economic, we conduct a critical analysis of associative accounting that would lead to another development of the associative accounting.
    Abstract: Dans un contexte de montée en management, les organisations associatives présentent une appétence croissante à comprendre et à élaborer leur comptabilité. Il en résulte pour certaines une ambition à satisfaire une attente en reddition comptable qui feraient d'elles des « entreprises associatives » à part entière. D'autres appréhendent leur comptabilité dans l'optique d'une gestion plus efficace au service de la mesure de la performance du service rendu. Au moyen d'une analyse exploratoire dans le champ de l'insertion par l'économique, nous conduisons une analyse critique approfondie de la comptabilité associative qui amènerait à un aménagement du plan comptable associatif.
    Keywords: Associative organizations,Accountability and social performance,Accounting,Comptabilité,Organisations associatives,Reddition,Performance sociale
    Date: 2020
  7. By: Bernardo Morais; Gaizka Ormazabal; José-Luis Peydró; Mónica Roa; Miguel Sarmiento
    Abstract: e show corporate-level real, financial, and (bank) risk-taking effects associated with calculating loan provisions based on expected-rather than incurred-credit losses. For identification, we exploit unique features of a Colombian reform and supervisory, matched loan-level data. The regulatory change induces a dramatic increase in provisions. Banks tighten all new lending conditions, adversely affecting borrowing-firms, with stronger effects for risky-firms. Moreover, to minimize provisioning, more affected (less-capitalized) banks cut credit supply to risky-firms- SMEs with shorter credit history, less tangible assets or more defaulted loans-but engage in "search-for-yield" within regulatory constraints and increase portfolio concentration, thereby decreasing risk diversification.
    Keywords: loan provisions, IFRS9, ECL, corporate real and credit supply effects of accounting, bank risk-taking
    JEL: E31 G18 G21 G28
    Date: 2020–09
  8. By: Canta, Chiara (Toulouse Business School); Cremer, Helmuth (Toulouse School of Economics); Gahvari, Firouz (University of Illinois at Urbana-Champaign)
    Abstract: We study optimal income taxation in a framework where one's willingness to report his income truthfully is positively correlated with his type. We show that allowing low-productivity types to cheat leads to Pareto-superior outcomes as compared to deterring them, even if audits can be performed costlessly. When there is no cheating, redistribution takes place on first- and second-best frontiers and can never make low-ability types more well-off than high-ability types. Letting low-ability types cheat allows first-best redistribution up to a limit at which low-ability types are better off than high-ability types.
    Keywords: optimal taxation, tax evasion, audits, welfare-improving
    JEL: H20 H21 H26
    Date: 2020–07

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.