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on Accounting and Auditing |
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Issue of 2017‒12‒18
six papers chosen by |
| By: | De George, Emmanuel T.; Li, Xi; Shivakumar, Lakshmanan |
| Abstract: | This paper reviews the literature on the effects of International Financial Reporting Standards (IFRS) adoption. It aims to provide a cohesive picture of empirical archival literature on how IFRS adoption affects: financial reporting quality, capital markets, corporate decision making, stewardship and governance, debt contracting, and auditing. In addition, we also present discussion of studies that focus on specific attributes of IFRS, and also provide detailed discussion of research design choices and empirical issues researchers face when evaluating IFRS adoption effects. We broadly summarize the development of the IFRS literature as follows: The majority of early studies paint IFRS as bringing significant benefits to adopting firms and countries in terms of (i) improved transparency, (ii) lower costs of capital, (iii) improved cross-country investments, (iv) better comparability of financial reports, and (v) increased following by foreign analysts. However, these documented benefits tended to vary significantly across firms and countries. More recent studies now attribute at least some of the earlier documented benefits to factors other than adoption of new accounting standards per se, such as enforcement changes. Other recent studies examining the effects of IFRS on the inclusion of accounting numbers in formal contracts point out that IFRS has lowered the contractibility of accounting numbers. Finally, we observe substantial variation in empirical designs across papers which makes it difficult to reconcile differences in their conclusions. |
| JEL: | F3 G3 |
| Date: | 2016–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:67599&r=acc |
| By: | Löhlein, Lukas |
| Abstract: | This study reviews the existing literature on the U.S. peer review system and the Public Company Accounting Oversight Board (PCAOB) inspection system to assess our knowledge of audit regulation. The traditional self-regulatory system of the accounting profession came to an end, in 2002, when the PCAOB was established to oversee the audit firms of publicly traded companies. This paper contributes to the controversial debate about self-regulation versus independent regulation by analyzing, categorizing, and comparing the research findings on the peer review system and the PCAOB system along three dimensions: the validity of peer reviews and PCAOB inspections, the recognition of reviews and inspections by decision-makers (e.g., investors, bankers, committees), and the effect of reviews and inspections on audit quality. Synthesizing the research on the regulatory regimes suggests that the notion of external quality control, both through peer reviews and government inspections, is positively linked with an improvement of audit quality. At the same time, the analysis indicates that external users do not seem to recognise peer review and PCAOB reports as very useful instruments for decision-making, which is in line with an identified rather skeptical perception of the audit profession on reviews and inspections. Overall, this study reveals that although the academic literature on peer review and PCAOB inspection is extensive it has not produced definitive conclusions concerning various aspects of audit regulation. This paper shows how this blurred picture is due to conflicting research findings, the dominance of the quantitative research paradigm, and unchallenged assumptions within the literature, and concludes by proposing research opportunities for the future. |
| Keywords: | public company accounting oversight board (PCAOB); inspection; peer review; quality assurance; self-regulation; accounting history; American Institute of Certified Public Accountants (AICPA) |
| JEL: | M40 |
| Date: | 2016–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:67147&r=acc |
| By: | von Hagen, Dominik; Harendt, Christoph |
| Abstract: | We investigate real investment, financial revenues and profits in formerly domestic firms once they enter a multinational entity (MNE) through an acquisition. We argue that following the acquisition, those targets are tax-optimized in a profit shifting context if they are acquired by MNEs with no controlled foreign corporation (CFC) rules in their headquarters' countries. In this case, we hypothesize that MNE-wide profit shifting opportunities decrease high-tax targets' cost of capital, which may have a positive effect on real investment of these targets. In addition, we hypothesize that financial revenues respectively profits of low-tax targets increase after the acquisition, since they may become destinations of profit shifting themselves. In line with the effects on real investment, profits of high-tax targets should decline. We find evidence for the effects on real investment. Further, these effects can no longer be observed in case of existing CFC rules in the acquirer's headquarters' country. This finding may suggest that CFC rules effectively mitigate MNE-wide profit shifting which in turn has detrimental investment effects. We also find some evidence for the expected effects for financial revenues but not for the profit measure. |
| Keywords: | International taxation,CFC rules,Profit shifting,Multinational entities,Crossborder mergers and acquisitions,Foreign direct investment |
| JEL: | F23 G34 H25 H26 H32 H73 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:17062&r=acc |
| By: | Maya Forstater |
| Abstract: | Public financial transparency is increasingly advocated as a solution to concerns over legal tax planning by multinational corporations, and illegal tax evasion, fraud and money laundering. Caution is warranted since the scale of revenues at stake are in fact smaller than is often perceived, while experience suggests that data transparency is not a simple route to accountability. In particular there are calls for mandatory publication of beneficial ownership (the ultimate owners of companies and trusts), and country-by-country reports by multinational corporations (detailing revenues, assets, employment, profits and taxes paid in each jurisdiction). Other proposals include publication of tax rulings and profit and loss accounts for all companies. The broad case is made that the problems are huge, and that public transparency is the only solution. For complex problems to gain political and public momentum, it is helpful to be able to point to simple, clear solutions. Public registers of beneficial ownership and country-by-country reporting have played this role for the issues of illicit financial flows and profit shifting. But, there is a danger both for governments and civil society that iconic transparency measures provide ‘form’ rather than the ‘function’ in seeking to solve these problems. Ultimately, the aim should be to iterate towards mechanisms that enable more responsive public institutions, trusted legal systems, more effective markets and a stronger social contract between governments and their people. |
| Keywords: | tax transparency tax evasion beneficial ownership fraud money laundering |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:chm:wpaper:wp2017-3&r=acc |
| By: | International Monetary Fund |
| Abstract: | The authorities have decided to improve public financial management by implementing an accrual accounting framework consistent with internationally accepted standards. The mission was asked to advise specifically on how such a reform might be implemented. The mission worked closely with the Accountant General and senior officials of the Treasury, and the Ministry of Finance and Economic Development (MoFED) to gain an understanding of the existing accounting and reporting framework and discuss major areas that would be affected by the planned move to accrual accounting. These discussions helped the mission to develop a high-level conceptual design of the accounting and reporting framework under an accrual International Public Sector Accounting Standards (IPSAS). |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/326&r=acc |
| By: | Christina Hood (IEA); Carly Soo (OECD) |
| Abstract: | Accounting for Nationally Determined Contributions (NDCs) under the Paris Agreement is needed to allow Parties to track individual progress towards their own mitigation-related NDC targets, understand others’ NDC targets and their progress toward them, and assess collective progress towards the long-term mitigation goal. This paper aims to assist Parties and stakeholders in framing thinking around the nature of accounting for mitigation targets given the diversity of target types in NDCs, and also to discuss how accounting guidance could be applied at various stages in the NDC cycle. It provides a summary and unpacking of the key accounting provisions under the Paris Agreement and Decision text, discusses the implications of the range of NDC target types, then discusses the particular issues of accounting for co-operative approaches and for the land sector. It then explores how accounting guidance may be applied within the NDC cycle. |
| Keywords: | accounting, carbon pricing, climate change, mitigation, UNFCCC |
| JEL: | F53 O44 Q54 Q56 Q58 |
| Date: | 2017–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envaab:2017/5-en&r=acc |