nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2023‒10‒30
five papers chosen by
Alexander Harin, Modern University for the Humanities


  1. European evidence on the effects of audit office changes on clients' financial reporting quality By AYOUB, Maysam
  2. Audit firms’ network structure and audit quality By AYOUB, Maysam
  3. IDENTIFICATION OF OPTIMIZATION OPPORTUNITIES TAX EXPENSES IN THE RUSSIAN FEDERATION By Sokolov, Ilya (Соколов, Илья); Belev, Sergey (Белев, Сергей); Tischenko, Tatiana (Тищенко, Татьяна); Leonov, Elisey (Леонов, Елисей); Vekerle, Konstantin (Векерле, Константин); Matveev, Evgeny (Матвеев, Евгений)
  4. Multinational firms in tax havens: Corporate motives, regulatory countermeasures, and recent statistics By Olbert, Marcel; Spengel, Christoph; Weck, Stefan
  5. Digital economy non-market components accounting methodology By Knobel, Alexander; Abroskin, Alexander; Abroskina, Natalia; Bagdasaryan, Kniaz; Zaytsev, Yuriy; Zyamalov, Vadim; Sedalishchev, Vladimir; Turuntseva, Marina

  1. By: AYOUB, Maysam
    Abstract: Prior research suggests that the financial reporting quality may be influenced by audit office-level characteristics. Yet, many factors are likely to influence whether within-firm office changes result in a positive or negative association with reporting quality. When clients switch to a different office within the same audit firm, they can potentially benefit from fresh perspectives and insights from the new audit team and partners. On the contrary, this transition may compromise the quality of the audit due to a decline in the team’s understanding of the client’s specific needs and the initial cost pressures required for the new team to prepare for the new assignment. Nevertheless, the ability of an audit office to provide a high-quality audit depends partly on how it relates to the network of offices in which it operates. Considering that changes in offices within the same audit firm reflect a challenge in efficiently allocating audit resources, we investigate whether there is a decline in financial reporting quality when a client changes to a different audit office within the same firm. We also examine whether teams from more connected offices are more capable of managing the transition and preserving reporting quality. Contrary to expectations, our analysis did not reveal any indication of a decline in financial reporting quality in a European context, and we did not find evidence that the adverse impact of changes in audit offices within the same firm, if any, on financial reporting quality lessens with greater network connectedness. Further, the additional testing results demonstrate that alterations in the auditor-client distance, as well as office upsizing, downsizing, upgrading, or downgrading of specialization, do not lead to a deterioration in financial reporting quality
    Date: 2023–05
    URL: http://d.repec.org/n?u=RePEc:ant:wpaper:2023007&r=acc
  2. By: AYOUB, Maysam
    Abstract: Audit offices function as semi-autonomous units within their audit firm network and individual partners have much autonomy in the course of their engagements. Therefore, maintaining a uniform level of quality across engagements is difficult to achieve for audit firms. We hypothesize that differences in audit quality between audit offices and partners from the same audit firm increase with the complexity of an audit firm’s network structure. The network structure of an audit firm increases in complexity with the number of local offices, number of individual audit partners, and their spatial distribution (i.e., the geographic dispersion of its offices and partners). To test this, we examine auditors’ going-concern reporting decisions for a sample of 23, 086 firm-year observations from 25 European countries for the period 2011-2019. Consistent with prior research using data from the US, we find evidence consistent with larger audit offices providing higher quality audits (i.e., there is a positive association between audit office size and the likelihood of going-concern opinions). However, our data do not provide evidence that that this office size effect increases as a function of the complexity of audit firm’s network structure.
    Keywords: Audit offices, Audit quality, Spatial distribution, Geographic distance
    Date: 2023–07
    URL: http://d.repec.org/n?u=RePEc:ant:wpaper:2023008&r=acc
  3. By: Sokolov, Ilya (Соколов, Илья) (The Russian Presidential Academy of National Economy and Public Administration); Belev, Sergey (Белев, Сергей) (The Russian Presidential Academy of National Economy and Public Administration); Tischenko, Tatiana (Тищенко, Татьяна) (The Russian Presidential Academy of National Economy and Public Administration); Leonov, Elisey (Леонов, Елисей) (The Russian Presidential Academy of National Economy and Public Administration); Vekerle, Konstantin (Векерле, Константин) (The Russian Presidential Academy of National Economy and Public Administration); Matveev, Evgeny (Матвеев, Евгений) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The relevance of the study is due to the fact that, caused by the coronavirus pandemic of 2020, it put on the agenda issues about choosing the best methods to support businesses and citizens. However, the choice, evaluation, and practical choice of steps faces with the still existing lack of elaboration of the methodological aspects of performance evaluation. Both instruments (tax expenditures and direct expenditures) have their own advantages and implementation, their application should be directly linked to the goal. The subject The subject of the study is the list and mechanisms for the formation of tax expenditures used as part of support measures. The aim of the study is to determine how to use the methodological approaches accumulated in the scientific literature and international experience to the definition and assessment of tax expenses, as well as their accounting and management. When forming the work, such methods as reasoned-critical analysis, hypothetical-deductive method, case methods, method of analysis of generalizations and extrapolation (interpolation) of results were used. The study used data from the Federal Treasury, Rosstat and the Ministry of Finance of Russia and GTED Database. The scientific novelty of the study consists in the use of new data to analyze the structure of tax expenditures and compare the methodologies of different countries. The result of the work was a report containing: 1. Generalization of methodological approaches to the definition and evaluation of tax expenditures in scientific research 2. Analysis of international experience in accounting and management of tax expenditures 3. Analysis of the Russian practice of granting tax expenditures 4. Evaluation of the effect of the introduction of the fiscal rule on the nature of the cyclicality of fiscal policy in developed and developing countries 5. Description of opportunities for optimizing tax expenditures in the Russian Federation. The results obtained allowed us to conclude that the Russian tax system is replete with too many deviations from the standard rules, which produce a significant amount of tax expenditures by world standards. In addition, the stated goals of preferences do not fully correspond to the distribution of tax expenditures by type of tax. Part of the tax expenditure generated under indirect taxes is implicitly intended as a tool to stimulate business and investment. This creates an opaque system for distributing preferences and comparing their volume (imputed subsidy) with the result. In turn, this contributes to the strengthening of the effect of fiscal illusion. In the future, the authors plan to continue the study of the effectiveness of tax expenditures in Russia and the world
    Keywords: BUDGET RULES, COUNTERCYCLICAL BUDGET, SOVEREIGN FUNDS, FINANCE
    JEL: H7 H72
    Date: 2022–11–11
    URL: http://d.repec.org/n?u=RePEc:rnp:wpaper:w20220217&r=acc
  4. By: Olbert, Marcel; Spengel, Christoph; Weck, Stefan
    Abstract: We investigate multinational firms' activities in tax havens and regulatory efforts to curb these activities in three steps. First, we discuss the evolution of information exchange and disclosure regimes among tax authorities, with a focus on the recent Countryby-Country (CbC) reporting regimes, designed to uncover and address tax haven usage by multinational firms. Second, we review existing empirical literature on multinational firms' tax haven utilization, specifically examining the impact of information exchange regulations and Country-by-Country Reporting. Third, we augment the current empirical evidence by presenting tax haven entity statistics from 2007 to 2021 for a representative multinational firm sample, sourced from Bureau van Dijk (BvD) Orbis and the aggregated CbC data provided by the Organisation for Economic Co-operation and Development (OECD). Our analysis suggests that, if exploited systematically, the recent Orbis database provides granular coverage of multinational firms' subsidiaries worldwide, including tax haven entities in jurisdictions without disclosure mandates and information sharing agreements. Our findings reveal that multinational firms' ownership of tax haven entities peaked in 2015, with over 50, 000 legal entities incorporated in tax havens (30, 000 in Big8 tax haven jurisdictions). Although the growth of tax haven entities slowed after 2015, the overall number remains substantial as of 2021. Furthermore, European multinationals experienced a modest decline in tax haven entities following the implementation of mandatory private CbCR. We conclude by discussing policy implications and suggesting avenues for future research.
    Keywords: Tax havens, multinational firms, tax avoidance, Country-by-Country Reporting, transparency, information exchange
    JEL: H20 H25 H26 F23 P45
    Date: 2023
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:23036&r=acc
  5. By: Knobel, Alexander (The Russian Presidential Academy of National Economy and Public Administration); Abroskin, Alexander (The Russian Presidential Academy of National Economy and Public Administration); Abroskina, Natalia (The Russian Presidential Academy of National Economy and Public Administration); Bagdasaryan, Kniaz (The Russian Presidential Academy of National Economy and Public Administration); Zaytsev, Yuriy (The Russian Presidential Academy of National Economy and Public Administration); Zyamalov, Vadim (The Russian Presidential Academy of National Economy and Public Administration); Sedalishchev, Vladimir (The Russian Presidential Academy of National Economy and Public Administration); Turuntseva, Marina (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: An inclusion of non-market goods and services which are core to the digital economy in the system of economic circulation affects the basic socio-economic indicators both in Russian and in international practice. In this connection, the goal of this study is to develop a methodological basis for accounting and measuring non-market components in the emerging digital economy of the Russian Federation. As methods and methodology of the study, we use the provisions of the 2008 SNA methodological base relating to the accounting of new objects in the system of economic turnover; methods of forming input-output tables in the SNA application system; methods of transforming the indicators of the formation and use of resources into a system of indicators of symmetric input-output tables; methods of matrix calculations in building indicators of intersectoral relations, taking into account the digitalization processes of the Russian economy; methods of accounting the influence of price and hedonistic The main are: the development of a methodological framework for accounting for nonmarket components in the formation of a system of indicators of the digital economy; the development of methodological approaches to the valuation of non-market components in measuring the economic effects of digitalization; testing the proposed methodology for accounting and measuring non-market components in the digital economy based on Russian data, and developing recommendations for using the results in the formation and implementation of economic and industrial.
    Keywords: information and analytical database, matrix calculations, system of national accounts, input-output tables, digital economy, non-market components
    JEL: O32 O33 E01
    Date: 2023–03–13
    URL: http://d.repec.org/n?u=RePEc:rnp:wpaper:w20220218&r=acc

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