nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2022‒06‒13
six papers chosen by

  1. FBR’s POS Integration: Digitalisation of Business Transactions and Associated Challenges By Ghulam Nabi
  2. Regards croisés sur l’intérêt d’un audit social de pré-acquisition en PME By Sonia Boussaguet; Caroline André
  3. Taxes, Risk Taking, and Financial Stability By Kogler, Michael
  4. The Effect on Family Farms of Changing Capital Gains Taxation at Death By McDonald, Tia M.; Durst, Ron; Whitt, Christine
  5. How Do Reward Versus Penalty Framed Incentives Affect Diagnostic Performance in Auditing? By Bright (Yue) Hong; Timothy W. Shields
  6. Unequal access to higher education based on parental income: evidence from France By Cécile Bonneau; Sébastien Grobon

  1. By: Ghulam Nabi (Pakistan Institute of Development Economics)
    Abstract: Tax revenue to GDP share varies across the globe depending on the capacity of the revenue authority of a government, with the world’s developed economies having a substantially higher capacity to collect a higher share of tax revenue (Besley and Person, 2014). Fiscal experts observe low compliance of taxes, where many people and businesses easily escape from the tax net in developing countries. Consequently, people do not voluntarily participate (evade taxes), or if they do, they reduce their taxable liabilities (tax avoidance). As they are operating in an undocumented sector, thanks to the lack of book-keeping or any other sources for internal or external audit by the revenue authorities. This reflects both hard-to-tax sectors; this includes a subset of economic activities where the tax compliance is problematic and needs to be increased and enhancing the revenue collecting authorities’ capacity to develop a more buoyant method of collecting desired revenues.
    Keywords: FBR, POS, Integration, Digitalisation, Business Transactions,
    Date: 2022
  2. By: Sonia Boussaguet (NEOMA - Neoma Business School); Caroline André (NEOMA - Neoma Business School)
    Abstract: This article is the result of a collaboration between two researchers from the fields of management science and law. The authors explore, in the case of an acquisition by an external third party, the interest of carrying out a social audit in an SME, which they consider to be both legal and human. The control points they raise have been encountered either during social audits or in the context of legal disputes. Their choice is guided by the human or financial consequences they may have in practice. This study has a double objective: on the one hand, it provides the community with avenues of research on the subject and, on the other hand, it offers buyers a first decision-making tool to better understand, evaluate and prevent social risks in their entirety.
    Abstract: Le présent article est le fruit d'une collaboration entre deux chercheuses issues des sciences de gestion et des sciences juridiques. Les auteurs explorent dans le cas d'une acquisition par un tiers externe tout l'intérêt de réaliser un audit social en PME, qu'elles estiment à la fois juridique et humain. Les points de contrôle qu'elles soulèvent ont été rencontrés soit au cours d'audits sociaux, soit dans le cadre du contentieux judiciaire. Leur choix est guidé par les conséquences humaines ou financières qu'ils peuvent avoir en pratique. Cette étude vise un double objectif : elle offre, d'une part, à la communauté des pistes de recherche sur le sujet et, d'autre part, aux repreneurs un premier outil d'aide à la décision, pour mieux appréhender, évaluer et prévenir les risques sociaux dans leur intégralité.
    Keywords: SME,Social audit,Social risk,Tool,Takeover,Reprise d'entreprise,PME,Audit social,Risques sociaux,Matrice
    Date: 2022–01–03
  3. By: Kogler, Michael
    Abstract: After the global financial crisis, the use of taxes to enhance financial stability received new attention. This paper compares two ways of taxing bank leverage, namely, an allowance for corporate equity (ACE), which addresses the debt bias in corporate taxation, and a Pigovian tax on bank debt (bank levy). We emphasize financial stability gains driven by lower bank asset risk and develop a principal-agent model, in which risk taking depends on the bank's capital structure and, by extension, on the tax treatment of debt and equity because of moral hazard. We find that (i) the ACE unambiguously reduces risk taking, (ii) bank levies reduce risk taking if they are independent of bank performance but may be counterproductive otherwise, (iii) high corporate tax rates render the bank levies less effective, and (iv) taxes are especially effective if capital requirements are low.
    Keywords: Pigovian taxes, corporate tax reform, bank risk taking, financial stability
    JEL: G21 G28 H25
    Date: 2022–05
  4. By: McDonald, Tia M.; Durst, Ron; Whitt, Christine
    Abstract: This report presents a method for assessing impacts of changes to capital gains taxation at death for family farm estates, an approach which accounts for the structural changes in a person’s wealth portfolio that often occurs as a person ages. The method is applied to the American Families Plan, which proposes to eliminate stepped-up basis for inherited assets greater than $1 million for individuals’ estates and $2 million for married couples’ estates while deferring capital gains tax liability on business assets as long as the business remains family operated. The results suggest that of the estimated 32,174 family farm estates in 2021, 1.1 percent would owe capital gains taxes at death, 18.2 percent would not owe capital gains taxes at death but could have deferred tax liability if the farm assets do not remain family-owned and operated, and 80.7 percent would have no change to their capital gains tax liability.
    Keywords: Farm Management, Financial Economics, Land Economics/Use, Research Methods/ Statistical Methods
    Date: 2021–09
  5. By: Bright (Yue) Hong (School of Accountancy & MIS, Driehaus College of Business, DePaul University); Timothy W. Shields (Argyros School of Business and Management, Economic Science Institute, Chapman University)
    Abstract: Prior research examines how rewards versus economically equivalent penalties affect effort. However, accountants perform various diagnostic analyses that involve more than exerting effort. For example, auditors often need to identify whether a material misstatement is the underlying cause of a phenomenon among the possible causes. Testing helps identify the cause, but testing is costly. When participants are incentivized to test accurately (rather than test more) and objectively (unbiased between testing and not testing), we find that framing the incentives as rewards versus equivalent penalties increases testing by lowering the subjective testing criterion and by increasing the assessed risk of material misstatement. However, testing increases primarily when a misstatement is absent, causing more false alarms under a reward frame with no improvement in misstatement detection. Penalties are pervasive in auditing. Our study suggests that rewards are more effective for increasing testing, and that increasing testing blindly can impair audit efficiency.
    Keywords: Frame, rewards, penalties, objectivity, accuracy, judgment, diagnostic tasks, experiment, auditing
    JEL: C92 D82 D81 M40
    Date: 2022
  6. By: Cécile Bonneau (Paris School of Economics et ENS); Sébastien Grobon (Centre d'Economie de la Sorbonne & DARES)
    Abstract: In this paper, we provide new stylized facts on inequalities in access to higher education by parental income in France. On average, an increase of 10 percentile ranks in the parental income distribution is associated with a 5.8 percentage point (p.p.) increase in the proportion of children accessing higher education - 4.2p.p. in the bottom half of the income distribution and 9.3 p.p. in the top half -. This overall level of inequality is surprisingly close to that observed in the United States. We then document how these inequalities in access to higher education by parental income combine with inequalities related to parental occupation or degree. Finally, we assess the redistributivity of public spending on higher education and more generally of all public spending on young adults and their parents, and present a new accounting method to take into account the tax contribution of parents in our redistributivity analysis
    Keywords: Higher education; Intergenerational social mobility; Income measurement; Education public spending, France
    JEL: H52 I2 J62
    Date: 2022–01

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