nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2022‒09‒12
nine papers chosen by

  1. The influence of covid-19 on provision measurement given international financial reporting standards By Kadri Abdelkader
  2. The effectiveness of the audit of INDH programs: Beacon of a relevant evaluation of social programs By Safae Ed-Douadi; Chafik Bakour
  3. Rank-and-File Accounting Employee Incentives and Financial Reporting Quality By Armstrong, Chris; Kepler, John D.; Larcker, David F.; Shi, Shawn
  4. Intermediary Balance Sheets and the Treasury Yield Curve By Du, Wenxin; Hebert, Benjamin; Li, Wenhao
  5. Revue de littérature sur lâincidence fiscale des taxes sur les entreprises By Julien Martin; Florian Mayneris
  6. The 'F Words': Why Surveying Businesses About Intangibles is so Hard By Josh Martin; Cain Baybutt
  7. Uruguay: Central Bank Transparency Code Review By International Monetary Fund
  8. GreenDeal : Quel reporting en matière de local content dans le domaine extractif ? By Florian Favreau
  9. Germany: Financial Sector Assessment Program Technical Note—Regulation And Supervision Of Less Significant Institutions By International Monetary Fund

  1. By: Kadri Abdelkader (Université Abdelhamid Ibn Badis de Mostaganem)
    Abstract: This research deals presenting the procedures for accounting measurement of intangible assets in accordance with International Accounting Standard IAS 37-Provisions, Contingent Liabilities and Contingent Assets. As this article aims to highlight key accounting and financial reporting impacts of COVID-19 to be considered by companies. In that, Provisions are selected as a sample for the study, in that this study relied on the descriptive analytical approach.
    Keywords: Accounting,Provisions,Obligation,Standards,covid-19 JEL Classification Codes: M41
    Date: 2022–06–04
  2. By: Safae Ed-Douadi (Ecole Nationale de Commerce et de Gestion Tanger - UAE - Université Abdelmalek Essaâdi); Chafik Bakour (Ecole Nationale de Commerce et de Gestion Tanger - UAE - Université Abdelmalek Essaâdi)
    Abstract: Supported by the theory of the explosion of auditing in the public sector, we retain the massive implementation of verification practices provided by internal auditing in public organization, inspired very directly by current practices in private companies. However, this importation has generated debates and criticisms relating to the need for audit practices, their relevance, but above all, their effectiveness within this sector, thus seeking to know whether it is indeed a function effective or an illusion of control. Nevertheless, despite the sustained efforts of researchers, the fact remains that the explanation of the effectiveness of public audit and its determinants still remain unclear or is difficult to understand. To this end, this article presents an exploratory study with the audit set up within the Ministry of the Interior, for an evaluation of INDH programs. The objective is to decide on the level of effectiveness of the internal audit function, and to question its main determinants. The results presented come from a survey using individual interviews with 9 leaders who are part of the governance bodies of the INDH. The study led to the most determining factors of the IAE. The level of internal audit effectiveness is also identified.
    Abstract: Soutenus par la théorie de l'explosion de l'audit dans le secteur public, nous retenons l'implantation massive des pratiques de vérification assurées par l'audit interne dans les organismes publics, inspirées très directement des pratiques en cours dans les entreprises privées. Cependant cette importation a généré des débats et critiques portant sur la nécessité des pratiques d'audit, sur leur pertinence, mais surtout, sur leur efficacité au sein de ce secteur, cherchant ainsi à savoir s'il s'agit bien d'une fonction efficace ou d'une illusion de contrôle. Néanmoins, malgré les efforts soutenus des chercheurs, il n'en demeure pas moins que l'explication de l'efficacité d'audit public et de ses déterminants reste encore floue ou est difficilement appréhendable. À cet effet, cet article présente une étude exploratoire auprès de l'audit mis en place au sein du ministère d'intérieur, pour une évaluation des programmes INDH. L'objectif est de statuer sur le niveau de l'efficacité de la fonction audit interne, et de s'interroger sur ses principaux déterminants. Les résultats présentés sont issus d'une enquête à l'aide d'entretiens individuels avec 9 dirigeants faisant partie des organes de gouvernances de l'INDH. L'étude a permis d'aboutir aux facteurs les plus déterminants de l'EAI. Le niveau d'efficacité d'audit interne est également dégagé.
    Keywords: Audit interne,Efficacité d'AI,INDH,Programmes sociaux,Secteur public.,IA effectiveness,Social programs,Public sector
    Date: 2022–05–31
  3. By: Armstrong, Chris (Stanford Graduate School of Business); Kepler, John D. (Stanford Graduate School of Business); Larcker, David F. (Stanford Graduate School of Business); Shi, Shawn (Stanford Graduate School of Business and University of Washington)
    Abstract: An extensive literature examines whether senior executives’ contractual incentives influence their financial reporting decisions. However, little is known about whether— and how—the incentives of lower-level (or “rank-and-file†) employees, who are perhaps even more directly involved in the financial reporting process, influence their behavior. We use a proprietary database with detailed, employee-specific information about these employees’ incentive-compensation plans and find that although firms with relatively well-paid accounting employees tend to issue higher quality financial reports, their reports tend to be of lower quality when these employees’ compensation is contingent rather than fixed. We also find that these relationships are more pronounced at firms whose senior executives have stronger contractual incentives to misreport, which sheds light on when lower-level accounting employees have incentives to promote, discourage, or thwart financial misreporting.
    JEL: G34 M12
    Date: 2022–05
  4. By: Du, Wenxin (Chicago and FRBNY); Hebert, Benjamin (Stanford); Li, Wenhao (USC)
    Abstract: We document regime change in the U.S. Treasury market post-Global Financial Crisis (GFC): dealers switched from a net short to a net long position in the Treasury market. We first derive bounds on Treasury yields that account for dealer balance sheet costs, which we call the net short and net long curves. We show that actual Treasury yields moved from the net short curve pre-GFC to the net long curve post-GFC, consistent with the shift in the dealers’ net position. We then use a stylized model to demonstrate that increased bond supply and tightening leverage constraints can explain this change in regime. This regime change in turn helps explain negative swap spreads and the co-movement between swap spreads, dealer positions, yield curve slope, and covered-interest-parity violations, and implies changing effects for a wide range of monetary policy and regulatory policy interventions.
    Date: 2022–06
  5. By: Julien Martin; Florian Mayneris
    Abstract: In October 2021, 136 OECD countries and jurisdictions representing more than 90% of global GDP signed a landmark agreement on a major reform of the international tax system to ensure a minimum tax rate of 15% for multinational companies starting in 2023. The taxes paid by these large multinationals will increase, but who will suffer the consequences? Some multinationals have already indicated that they will raise the prices of their services in response to this reform, implying that part of the tax will be paid by consumers. Others suggest that they will negotiate down the prices paid to their suppliers, shifting the burden of the tax onto those third parties. Businesses may also respond by reducing wages, thereby shifting the burden of the tax onto their workforce. Finally, other businesses may choose to delocalize their operations. This example illustrates the difference between the statutory impact and the tax impact. From an accounting perspective, the tax is borne by those who pay it. This is called the statutory impact. But in reality, the party that pays a tax does not necessarily bear the cost. In other words, part of the tax burden will actually be borne by businesses, but part will be passed on to other economic agents. This is called tax incidence. This report provides a review of the most recent literature on the subject that will be very useful in thinking about the implementation of tax policies and their implications. The authors review the theoretical and empirical literature in detail and draw out nine key lessons regarding the impact of corporate income taxation, dividend taxation and payroll taxes. Impacts on prices, wages, investment and location decisions, and tax avoidance or tax optimization activities are examined. En octobre 2021, 136 pays et juridictions de l’OCDE représentant plus de 90 % du PIB mondial ont signé un accord historique portant sur une réforme majeure du système fiscal international afin de garantir l’application d’un taux d’imposition minimum de 15 % aux entreprises multinationales à compter de 2023. Les taxes payées par ces grandes multinationales vont donc augmenter, mais qui va en subir les conséquences? Certaines multinationales ont déjà indiqué qu’elles relèveraient les prix de leurs services en réponse à cette réforme, ce qui implique qu’une partie de la taxe sera financée par les consommateurs. D’autres laissent entendre qu’elles négocieront à la baisse les prix payés à leurs fournisseurs, reportant ainsi le poids de la taxe sur ces tierces parties. Les entreprises pourraient aussi réagir en réduisant les salaires, reportant ainsi le poids de la taxe sur leur main-d’œuvre. Enfin, d’autres entreprises pourraient choisir de délocaliser leurs activités. Cet exemple illustre la différence entre l’incidence statutaire et l’incidence fiscale. Du point de vue comptable, la taxe repose sur celles et ceux qui s’en acquittent. C’est ce qu’on appelle l’incidence statutaire. Mais dans les faits, la partie qui s’acquitte d’une taxe n’en supporte pas nécessairement le coût. Autrement dit, une partie de la charge fiscale sera effectivement supportée par les entreprises, mais une partie sera répercutée à d’autres agents économiques. C’est ce qu’on appelle l’incidence fiscale. Ce rapport propose une revue des écrits les plus récents sur le sujet qui sera très utile pour réfléchir à la mise en œuvre des politiques fiscales et à leurs implications. Les auteurs examinent en détail la littérature théorique et empirique et en tirent neuf principaux enseignements concernant l’incidence de l’imposition sur le revenu des sociétés, la taxation des dividendes et les taxes sur la masse salariale. Les impacts sur les prix, les salaires, les décisions d’investissement et de localisation, et les activités d’évitement fiscal ou d’optimisation fiscale sont examinés.
    Keywords: impact,corporate income tax,payroll taxes,location choices,tax avoidance, incidence,impôt sur les sociétés,taxes sur la masse salariale,choix de localisation,évitement fiscal
    JEL: E62 H25 H26 F20
    Date: 2022–08–19
  6. By: Josh Martin; Cain Baybutt
    Abstract: The role of intangible assets in creating value in the modern economy is increasingly recognised, but measurement of their value and contribution are still in their infancy. This reflects a number of measurement challenges, which we characterise as 'the four F words'. First, data on intangibles are often not retained by businesses, as business accounting poses high hurdles for these assets to be recorded, and they usually cannot be used as debt collateral. As a result, businesses rarely have the information available to respond to business surveys, and often appear to give 'inconsistent responses' to survey questions: these intangible assets can be forgotten by businesses. Second, since surveys on intangible assets are often carried out under the auspices of 'research' or through surveys on 'innovation', rather than official investment surveys, businesses may be primed to respond in one way or another. Thus, the framing of surveys on intangibles might be especially important. Third, definitions of intangible assets vary from researcher to researcher, and can often overlap or be unclear. While those assets included in the National Accounts have precise definitions, those measured outside the boundary do not. These terms, for businesses and researchers, are fuzzy. Finally, unlike most investments, the creation of intangible assets can take a long time. Most tangible assets can be made and purchased reasonably quickly, and/or the purchase date is clear for the business. In the case of intangibles, especially own-account investment (which is especially common for intangibles) the production process can be gradual over many periods. Asking businesses to provide investments in any given period might thus cause problems; the frequency of surveys could therefore be key. We establish these characteristics and demonstrate their impact on the quality of data on intangibles collected through business surveys in the UK through a range of data sources and microdata linkage. We draw on this research to propose modifications to surveys on intangible investment that might yield superior data.
    Keywords: business surveys, capital, data collection, intangible assets
    JEL: C81 C83 E22
    Date: 2022–08
  7. By: International Monetary Fund
    Abstract: The Central Bank of Uruguay (BCU) is implementing transparency practices that are broadly aligned with the good practices for central banks (Table 1). The institution’s comprehensive communication tools and strategy underpin the commitment to transparency and its accountability for the price stability and financial system soundness mandates. In addition, the adoption of transparency among its value statements supports its mission “to contribute to the wellbeing of the society.” The BCU management wants to make further improvements in the transparency practices and envisions that by relying on its strong legal and institutional arrangements this can be achieved. Ultimately, the BCU intends to be recognized as an “independent, effective, and reliable institution with the capability to anticipate and respond to new challenges.”
    Keywords: IMF central bank transparency code; CBT review summary; Banco de la República Oriental del Uruguay; IMF mission; financial system report; staff team of the International Monetary Fund; Anti-money laundering and combating the financing of terrorism (AML/CFT); Financial statements; Financial sector stability; International reserves; Foreign exchange intervention; Global
    Date: 2022–07–21
  8. By: Florian Favreau (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)
    Abstract: Companies in the extractive sector implement local content measures in the areas in which they operate. These measures – training, education, employment, infrastructure, health – must benefit local populations. Companies report on these activities by publishing the information required by the Non-Financial Reporting Directive (NFRD). The literature and the exploratory analysis of local content clauses appearing in extractive contracts published over the last three years (2018-2020) by the Extractive industry transparency initiative, show that the reform of the NFRD should provide for a precise definition of the notion of local population and a precise measurement of its satisfaction, for example through the use of the notion of consent (FPIC).
    Abstract: Les entreprises du secteur extractif mettent en oeuvre des mesures de local content, sur les territoires sur lesquelles elles opèrent. Ces mesures – formation, enseignement, emploi, infrastructures, santé – doivent bénéficier aux populations locales. Les entreprises rendent compte de ces activités en publiant les informations prévues dans la Non financial reporting directive (NFRD). La littérature et l'analyse exploratoire des clauses de local content qui apparaissent dans les contrats extractifs publiés ces trois dernières années (2018-2020) par l'Extractive industry transparency initiative, montrent que la réforme de la NFRD devrait prévoir une définition précise de la notion de population locale et une mesure de sa satisfaction, par exemple au travers de l'utilisation de la notion de consentement (CLPE).
    Keywords: Non-Financial reporting directive (NFRD),Extractive sector,Energy transition,Employability,Local populations,GreenDeal,Secteur extractif,Transition énergétique,Employabilité,Populations locales,Reporting
    Date: 2021–09–01
  9. By: International Monetary Fund
    Abstract: The Financial Sector Assessment Program (FSAP) conducted a focused review that primarily assessed banking regulation and supervision of Germany’s less significant institutions (LSIs).1 Germany accounts for 1,324 of about 2,400 total LSIs in the Euro Area (representing 40 percent of Germany’s banking sector assets and approximately 55 per cent of total Euro Area LSI assets). As Germany is part of the Euro Area, the regulation and supervision of banks takes place within the European Central Bank’s (ECB) Single Supervisory Mechanism (SSM). The Federal Financial Supervisory Authority (BaFin) and the Deutsche Bundesbank (BBk) are responsible, under the oversight of the ECB, for the supervision of LSIs.
    Keywords: Germany FSAP; auditor oversight commission; FSAP's finding; audit oversight body; CRR credit institution; Bank supervision; Credit; Commercial banks; Financial Sector Assessment Program; Cooperative banks; Europe
    Date: 2022–08–03

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.