nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2023‒01‒30
nine papers chosen by

  1. Financial statement users’ judgment and disaggregated tax disclosure By Eva Eberhartinger; Nadia Genest; Soojin Lee
  2. Republic of Moldova: Technical Assistance Report-Performance Assessment Report By International Monetary Fund
  3. Refining Public Policies with Machine Learning: The Case of Tax Auditing By Marco Battaglini; Luigi Guiso; Chiara Lacava; Douglas L. Miller; Eleonora Patacchini
  4. Accounting article By Alya.A, Nur
  5. Taxing Intellectual Property Assets on a Cross- Border Transaction: Application of Mobilia Sequuntur Personam and the Case of India-Mauritius Tax Treaty By M. P. Ram Mohan; Aditya Gupta
  6. ESG disclosure: regulatory framework and challenges for Italian banks By Tommaso Loizzo; Federico Schimperna
  7. User Reviews, Ratings and Adoption of accounting mobile apps in Kenya By Kamau, Charles Guandaru; Asser, Juliana Hawario; Ibua, Mary Penina; Otiende, Isaac Ojung'a
  8. The Importance of Escape Clauses: Firm Response to Thin Capitalization Rules By Martin Eckhoff Andresen; Lars Thorvaldsen
  9. Nontariff barriers, trading companies and customs duties evasion By Mattos, Enlinson; Bressan, Rafael

  1. By: Eva Eberhartinger (Vienna University of Economics and Business - WU - Wirtschaftsuniversität Wien [Austria]); Nadia Genest (Vienna University of Economics and Business - WU - Wirtschaftsuniversität Wien [Austria], HEC Montréal - HEC Montréal); Soojin Lee
    Date: 2020–12–31
  2. By: International Monetary Fund
    Abstract: The State Tax Service (STS) has made good progress in enhancing services to taxpayers. A stable dispute resolution process and new tools for enhancing the quality of tax audit will lay a good foundation for an increase in public trust in Moldovan tax administration. The recent focus on establishing processes for business continuity to reduce operational and human capital risks shows a good level of preparedness to manage external hazards.
    Date: 2022–12–15
  3. By: Marco Battaglini; Luigi Guiso; Chiara Lacava; Douglas L. Miller; Eleonora Patacchini
    Abstract: We study the extent to which ML techniques can be used to improve tax auditing efficiency using administrative data, without the need of randomized audits. Using Italy's population data on sole proprietorship tax returns, audits and their outcome, we develop a new approach to address the so called selective labels problem - the fact that a ML algorithm must necessarily be trained on endogenously selected data. We document the existence of substantial margins for raising revenue from audits by improving the selection of taxpayers to audit with ML. Replacing the 10% least productive audits with an equal number of taxpayers selected by our trained algorithm raises detected tax evasion by as much as 38%, and evasion that is actually payed back by 29%.
    JEL: H2 H20 H26
    Date: 2022–12
  4. By: Alya.A, Nur
    Abstract: This study aims to determine the application of accounting systems to control costs incurred by companies in the value chain. This research uses quantitative methods with research objects, namely manufacturing companies. Data sources were obtained from several companies in Indonesia. Data collection methods used are documents analysis and literature analysis. From the results of the analysis it was found that the application of accounting science is very important in the efficiency and effectiveness of the company financial reportingcycle so as to minimize the occurrence of errors and data loss.
    Date: 2022–12–17
  5. By: M. P. Ram Mohan; Aditya Gupta
    Abstract: Intellectual Property (IP) assets enjoy a unique advantage in tax planning. Owing to their intangible nature and the lack of a physical attribution, IP assets can be methodologically parked to transfer income between tax jurisdictions. In 2016, the Delhi High Court was presented with a dispute where IP assets registered in India were transferred between an Australian and English company through their subsidiary holdings in Mauritius. The question before the Court was which tax jurisdiction, India, Australia or Mauritius, would be entitled to tax the capital gains arising from the transaction. The Court held that if a foreign corporation owns an IP asset, regardless of its registration and use in India, it would be taxed by the jurisdiction of the owner’s residence. Coming to its conclusion, the Indian Court found a legislative vacuum in the Indian Income Tax Act, 1961, and relied on the doctrine of Mobilia Sequuntur Personam to fill the lacunae. The present study examines the relevance of the doctrine in line with precedential guidelines and the international treaty framework. The paper reveals that, either inadvertently or by design, the Indo-Mauritian DTAA creates an instance of double tax exemption of Mauritian-owned, Indian-registered IP assets.
    Date: 2023–01–01
  6. By: Tommaso Loizzo (Bank of Italy); Federico Schimperna (Bank of Italy)
    Abstract: In line with developments at the global level, the attention of financial regulators on ESG factors, particularly on environmental and climate-related risks, has significantly increased over recent years. In this context, disclosure of relevant climate-related information plays a key role, for both financial and non-financial stakeholders. The EU regulatory framework on disclosure is rather advanced when compared with other jurisdictions and will be almost ready for implementation in the next few months. The Bank of Italy, in line with the ECB and other national supervisors, has started a number of initiatives aimed at actively contributing to major international projects, strengthening the dialogue with the national industry and assessing the progress made by supervised entities. The paper: i) summarises the main regulatory requirements for ESG disclosure; ii) investigates the areas of commonalities at the EU level between the Pillar 3 disclosure requirements and those envisaged by the standards under development by the EFRAG; iii) takes stock of the main supervisory initiatives undertaken so far and presents some preliminary thoughts on the major challenges ahead to be faced by Italian banks.
    Keywords: ESG, sustainability, climate change, disclosure, CSRD, banks, Pillar 3, ESRS
    JEL: G21 K20 M41
    Date: 2022–12
  7. By: Kamau, Charles Guandaru (Technical University of Mombasa); Asser, Juliana Hawario; Ibua, Mary Penina; Otiende, Isaac Ojung'a
    Abstract: The modern industrial civilization improves anthropogenic activities and greatly simplifies human effort and the industrial world. Cloud computing and mobile applications are increasingly more than just trendy buzzwords; they are crucial elements of how business will be conducted in the future. A rising number of SMEs are currently utilizing mobile and cloud computing technology. This study examines the links between customer reviews, app ratings, and accounting app adoption in Kenya. The study collected data on 35 commonly used accounting mobile applications and performed a regression analysis on 27 apps that had received user reviews. Data on mobile apps' usage rate, volume of user reviews, and user ratings were gathered for this study. This study's findings revealed a significant relationship between the number of user evaluations and the adoption of accounting mobile apps. However, the study did not observe a significant effect of user reviews on the adoption of accounting mobile apps. This paper also identifies a few shortcomings that app users have pointed out in their reviews. The study's findings indicate that Kenya's degree of mobile app adoption has greatly increased due to the volume of app reviews. This study advises entrepreneurs, particularly those who engage with SMEs, to embrace technology and adopt freely downloadable mobile apps for their accounting and bookkeeping requirements.
    Date: 2023–01–03
  8. By: Martin Eckhoff Andresen; Lars Thorvaldsen
    Abstract: Escape clauses, where small firms are exempt from particular tax rules, is a crucial feature of a number of corporate tax schemes, but creates incentives to avoid taxation by manipulating the measures that determine inclusion. We evaluate the impact of thin capitalization rules, which commonly feature such escape clauses across the world, by exploiting the introduction of these rules in Norway in 2014. Combining difference-in-differences, regression discontinuity and bunching estimates, we show that what appears to be a strong response in the capital structure among exposed firms primarily reflect within-group reallocation of debt to avoid exposure to the rules. We observe sharp bunching among both new and existing subsidiaries at both thresholds for rule inclusion, and find that internal corporate group debt is offloaded to these bunching subsidiaries in order to avoid additional tax costs. As a result, significant and large effects on firm-level capital structure in response to the thin capitalization rules is driven by reshuffling of capital within corporate groups with little real effects. Re-estimating the difference-in-difference specification at the corporate group level confirms this finding, questioning the extent to which thin capitalization rules affect the real economy due to the presence of escape clauses.
    Keywords: thin capitalization rules, capital structure, escape clauses, difference-in-differences, bunching
    JEL: H25 H26 G30
    Date: 2022
  9. By: Mattos, Enlinson; Bressan, Rafael
    Abstract: This paper leverages an exogenous tariff reform in Brazil with rich administrative data to document the elasticity of customs duties evasion (ECDE) for the universe of importers in Brazil. We focus on the role of two modulators of ECDE: (i) nontariff barriers (NTB) and (ii) trading companies. Our findings are threefold. First, we estimate the elasticity of misreported imports to be larger than that in comparable literature. Controlling for misclassification, our results suggest an increase of 2.43% in evasion for each percentage point increase in tariff rate for missing values and 1.45% for missing quantities. Second, NTBs can reduce the elasticity of evasion up to 0.91 and -0.06, for value and quantity, respectively. This finding reinforces the NTB’s stricter enforcement role due to its papertrail. Third, we find no evidence that trading companies evade differently than other importers. Auditing policies and reputation concerns are investigated.
    Date: 2022–12–19

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