nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2023‒07‒17
nine papers chosen by

  1. Audit Sistem Informasi Akuntansi Penerimaan Uang Pada Perusahaan Dagang Furniture By Aulia, Rizki Luthfi; Agatha, Meiyola Krisma; , Nurfadilah; Najmuddien, Fiqri
  2. Profit-shifting Frictions and the Geography of Multinational Activity By Alessandro Ferrari; Sébastien Laffitte; Mathieu Parenti; Farid Toubal
  3. Retained earnings and foreign portfolio ownership: Implications for the current account debate By Goldbach, Stefan; Harms, Philipp; Jochem, Axel; Nitsch, Volker; Weichenrieder, Alfons J.
  4. Belize: Technical Assistance Report-Transition to Accrual Accounting By International Monetary Fund
  5. Tax Policy Design in a Hierarchical Model with Occupational Decisions By Sebastian Castillo
  6. The Thin Line between Sustainability and Deception: Understanding the Correlation between Green Management and Financial Accounting Fraud By Hidayatullah, Mokhamad Alfiyan
  7. The blind spots of interdisciplinarity in addressing grand challenges By Pimentel, Erica; Cho, Charles; Bothello, Joel
  8. The Race between Tax Enforcement and Tax Planning: Evidence from a Natural Experiment in Chile By Sebastián Bustos; Dina Pomeranz; Juan Carlos Suárez Serrato; José Vila-Belda; Gabriel Zucman
  9. Reporting and derivation of data on financial transactions related to banks’ securities holdings By Colangelo, Antonio; Pérez, Asier Cornejo; Liberati, Danilo; Nuzzo, Giorgio; Caloca, Antonio Rodríguez

  1. By: Aulia, Rizki Luthfi; Agatha, Meiyola Krisma; , Nurfadilah; Najmuddien, Fiqri
    Abstract: This study aims to determine the effectiveness of implementing internal control over cash receipts and disbursements accounting systems in furniture trading companies. The research method used is a qualitative descriptive literature study using a flowchart as an analytical tool. The results showed that the company had implemented internal control of the cash receipts and disbursements accounting system properly and efficiently. This is evidenced by the fulfillment of the principles of internal control. However, there are still some weaknesses so that the company needs to make improvements so that operational activities can be carried out more effectively.
    Date: 2023–06–15
  2. By: Alessandro Ferrari; Sébastien Laffitte; Mathieu Parenti; Farid Toubal
    Abstract: International tax rules are commonly viewed as obsolete as multinational corporations exploit loopholes to move their profits to tax havens. This paper uncovers how international tax reforms can curb profit shifting and impact real income and welfare across nations. We introduce profit shifting and corporate taxation in a quantitative model of multinational production. The model delivers "triangle identities" through which we recover bilateral profit-shifting flows. Our estimates of both tax-base and profit-shifting elasticities, together with profit-shifting frictions, govern how taxes shape the geography of production and profits. Our model accommodates a rich set of corporate taxation scenarios. A global minimum tax would be beneficial for welfare since it would increase the public good provision and encourage countries to raise their statutory corporate tax rates. Instead, a border-adjustment tax that eliminates profit shifting could result in welfare losses.
    Keywords: Profit Shifting;Tax Avoidance;Tax Havens;International Tax Reforms;Minimum taxation;DBCFT;Multinational firms
    JEL: F23 H25 H26 H32 H73
    Date: 2023–06
  3. By: Goldbach, Stefan; Harms, Philipp; Jochem, Axel; Nitsch, Volker; Weichenrieder, Alfons J.
    Abstract: In some countries, a sizable fraction of savings is derived from corporate savings. Although larger, traded corporations are often co-owned by foreign portfolio investors, current international accounting standards allocate all corporate savings to the host country. This paper suggests a framework to correct for this misleading attribution and applies this concept to Germany. For the years 2012 to 2020, our corrections retrospectively reduce German savings and consequently the German current account surplus by, on average, €11.5bn annually. This amounts to approximately five percent of Germany's average official current account surplus (€226.6bn) across these years.
    Keywords: current account, balance of payments, corporate savings, retained earnings, foreign portfolio investment, Germany
    JEL: F32 E21
    Date: 2023
  4. By: International Monetary Fund
    Abstract: Belize is planning to transition to accrual accounting over the medium term. This reform is considered an advanced practice on the public financial management (PFM) spectrum and has been attempted by few regional comparators (Barbados, Bermuda, Cayman Islands and Curacao). There is a strong commitment and enthusiasm for reform from the Treasury’s new leadership. The authorities want to improve transparency and accountability as well as shift their current focus on payments and reconciliations to include modern Treasury functions such as financial management, cash management and financial reporting. While full accrual practices may not be achieved in the short term, the reform presents opportunities for more efficient work procedures, greater cross-cutting collaboration, improved transparency, lower borrowing costs and the possibility to become a regional example.
    Date: 2023–06–08
  5. By: Sebastian Castillo (University o fHelsinki, Helsinki GSE and the Finnish Centre of Excellence in Tax Systems Research)
    Abstract: This study incorporates occupational decisions in a hierarchical model to investigate distortions in the tax policy design. The economy has two sectors, wage-earners and self-employment, where evasion is only possible in the latter. The optimal audit split self-employed between audited and non-audited distorted the occupational decision in the last group. The marginal tax rate is smaller than the case without occupational choices, showing that not considering it produces an upward tax bias. The optimal IRS budget does not allow for auditing the entire self-employment sector but is larger than the case without occupational choices. Production efficiency is not attained at the optimum because occupational decisions are distorted. This result contradicts the Diamond-Mirrlees theorem. Finally, differential taxation is a Pareto improvement but implies higher taxes for self-employment. This result increases distortions in the optimal allocation of agents compared to the former setting.
    Keywords: Tax Evasion, Hierarchical Model, Tax Policy, Auditing, Income Taxation, Occupational Choice, Production efficiency
    JEL: H26 H21 H83
    Date: 2022–11
  6. By: Hidayatullah, Mokhamad Alfiyan
    Abstract: The correlation between green management and financial accounting fraud underscores the need for a comprehensive understanding of the complexities surrounding sustainability initiatives. While green management practices can contribute to a more sustainable future, they must be implemented with transparency and integrity. By addressing the challenges and establishing robust accountability mechanisms, we can ensure that sustainability remains a guiding principle, untainted by financial misconduct. Only through a holistic approach can we achieve a true balance between environmental responsibility and financial integrity.
    Date: 2023–05–31
  7. By: Pimentel, Erica; Cho, Charles; Bothello, Joel
    Abstract: When implemented effectively, interdisciplinary research can produce practical impact towards addressing societal “grand challenges” while also generating novel conceptual insights that advance theory. However, despite decades of calls for interdisciplinarity, research communities continue to become more siloed and less impactful. This paper aims to highlight the obstacles to interdisciplinary work contained within the accounting community, specifically those associated with Interdisciplinary Accounting Research (IAR). We argue that, in order to overcome these obstacles and produce more effective and impactful interdisciplinary work, we require four IAR practices: Problem-solving, Public engagement, Professionalism and Performance Revision. Our purpose is to identify challenges as well as solutions that reduce the friction that accounting academics experience when collaborating with scholars outside their research discipline, especially when it concerns addressing grand challenges.
    Keywords: interdisciplinary; accounting academic research; engagement and impact; community
    JEL: M0
    Date: 2022
  8. By: Sebastián Bustos; Dina Pomeranz; Juan Carlos Suárez Serrato; José Vila-Belda; Gabriel Zucman
    Abstract: Profit shifting by multinational corporations is thought to reduce tax revenue around the world. While transfer pricing regulations are meant to curtail profit shifting, there have been rising concerns that a sophisticated tax advisory industry can limit their effectiveness. This paper provides a comprehensive analysis of how firms and tax advisors respond to the introduction of standard regulations aimed at limiting profit shifting. Using administrative tax and customs data from Chile in difference-in-differences event-study designs, we find that the reform was ineffective in reducing multinationals’ transfers to lower-tax countries and did not significantly raise tax payments. At the same time, interviews with tax advisors reveal a drastic increase in tax advisory services. The qualitative interviews also allow us to identify and then quantitatively confirm a common tax planning strategy in response to the reform. These results illustrate that when enforcement can be circumvented by sophisticated tax planning, it can benefit tax consultants at the expense of tax authorities and taxpayers.
    JEL: H25 H26 H32
    Date: 2023
  9. By: Colangelo, Antonio; Pérez, Asier Cornejo; Liberati, Danilo; Nuzzo, Giorgio; Caloca, Antonio Rodríguez
    Abstract: This paper contributes to the ongoing efforts by the European authorities to reduce the reporting burden for banks by assessing the statistical methods currently used to compile data on financial transactions related to securities holdings. Based on statistical information collected from the Banca d’Italia, we compare data on purchases of securities net of sales and redemptions reported by banks with transaction estimates based on indirect (balance sheet) methods that are permitted within the methodological framework of datasets compiled by the European System of Central Banks (ESCB). Although the direct method of collecting data on transactions is more costly for reporting agents, it produces results which are fully aligned with current statistical methodological standards (European System of Accounts 2010, ESA 2010). By contrast, the indirect method is a simplified and less costly approach. The recent development of high-quality data sources such as the ESCB integrated system for the market prices of securities – the Centralised Securities Database – has boosted the attractiveness of indirect methods since they have the potential to deliver accurate and reliable estimates. The significance of the differences between direct collection and indirect compilation of these data is analysed in detail for listed ISIN securities that are actively traded on exchanges, by also considering the impact of price volatility and trading activity. From an aggregated perspective, all indirect methods produce results which are comparable and consistent with the ESA 2010 methodology for all instrument types. There are some minor differences for equity instruments, due to the higher price volatility and trading activity associated with these instruments, but the overall aggregated dynamics are also well captured by indirect methods in these cases. [...] JEL Classification: C18, C81, G15
    Keywords: micro data, securities, security-by-security data, transaction data
    Date: 2023–06

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