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Author: Preeti Choudhary Publisher: ISBN: Category : Languages : en Pages : 58
Book Description
This paper re-examines whether auditor-provided tax services (APTS) are associated with better or worse audit quality. While some believe that one accounting firm providing both audit and tax services to a client improves audit quality through knowledge spillover, others are concerned that non-audit services inhibit auditor independence by lowering auditors' professional skepticism. Using a tax-specific measure of audit quality that captures within-GAAP income tax estimation error and more rigorous econometric techniques to address endogeneity than those employed by prior research, we find that greater APTS are associated with worse audit quality. When a company begins purchasing a material amount of APTS, income tax estimation error is 17 percent greater. Exploratory analyses suggest that the greater income tax estimation error is due to compromised auditor ability, not compromised auditor incentives. Our findings inform US and EU initiatives that question whether one accounting firm should provide both audit and tax services to a client.
Author: Preeti Choudhary Publisher: ISBN: Category : Languages : en Pages : 58
Book Description
This paper re-examines whether auditor-provided tax services (APTS) are associated with better or worse audit quality. While some believe that one accounting firm providing both audit and tax services to a client improves audit quality through knowledge spillover, others are concerned that non-audit services inhibit auditor independence by lowering auditors' professional skepticism. Using a tax-specific measure of audit quality that captures within-GAAP income tax estimation error and more rigorous econometric techniques to address endogeneity than those employed by prior research, we find that greater APTS are associated with worse audit quality. When a company begins purchasing a material amount of APTS, income tax estimation error is 17 percent greater. Exploratory analyses suggest that the greater income tax estimation error is due to compromised auditor ability, not compromised auditor incentives. Our findings inform US and EU initiatives that question whether one accounting firm should provide both audit and tax services to a client.
Author: Kevin A. Diehl Publisher: ISBN: Category : Languages : en Pages : 18
Book Description
Kinney et al. (2004) ask in the Journal of Accounting Research: Why do higher levels of auditor-provided tax services lower the chances of restatements? In resolving this question, this paper investigates the relationship between auditor-provided tax services and restatements with proxies to represent the motivations of the audit committee and chief financial officers. Because Sarbanes-Oxley requires audit committee preapproval for these tax services, the necessity for including these variables is obvious. Logistic regression of seven specifications show that higher levels of auditor-provided tax services, financial experts, and long-term compensation are inversely and statistically significantly related to all restatements and (more strongly) to tax-influential restatements. The cash effective tax rate directly and statistically significantly relates to those specifications, showing that just increasing spending on these tax services cannot signal high-quality financial reporting in the absence of effective utilization.
Author: Pieter von Wielligh Publisher: Oxford University Press, USA ISBN: 9780190749040 Category : Medical Languages : en Pages : 0
Book Description
Auditing Fundamentals in a South African Context 2e is a practical, applied and engaging introductory textbook that supports students throughout the undergraduate level of the Auditing curriculum. The text is designed to enhance learning by supporting holistic understanding: theory is presented within the framework of the real-world business environment, assisting students to apply principles and standards with an understanding of their context. The text offers a clear pedagogical framework, which supports applied learning and develops independent, critical and reflective engagement with the subject matter. A continuing case study, which follows each stage of the audit of a South African company, demonstrates the practical application of learned principles and the integration of the auditing process with a typical audit client's business. The second edition is comprehensively revised to reflect all relevant, recent changes in the requirements of legislation, financial reporting and auditing pronouncements and codes, and addresses the new Code of Professional Conduct which was issued by the SA Institute of Chartered Accountants in the final quarter of 2018. Additional educational resources support teaching and learning, assisting students to develop the academic skills required to master their studies.
Author: Thomas C. Omer Publisher: ISBN: Category : Languages : en Pages :
Book Description
This study investigates auditor-provided tax services from 2000 to 2002, during which fees paid to auditors for nonaudit services (NAS) were disclosed, but separate disclosure of tax service fees was voluntary. We examine changes in the market for tax NAS in 2002, as Congress debated possible prohibition of these services. Using the Heckman MLE procedure to control for selection bias in tax fee disclosure, we find that a strong pre-2002 positive association between tax fees and higher than expected audit fees weakened significantly in 2002, suggesting that some companies paying high audit fees reduced or terminated auditor-provided tax services in 2002. Our findings also suggest that auditor-provided tax services were reduced among new or short-tenure clients. Controlling for tax complexity, we also find some evidence that early quot;returnsquot; (i.e., tax rate reductions) to companies from auditor-provided tax services were reduced in 2002. Finally, results of our selection model imply that the decision to voluntarily disclose fees paid to the auditor for tax services is positively associated with tax complexity and auditor tenure, and negatively associated with the proportion of NAS fees to total fees. Overall, our findings imply significant change in auditor-provided tax services prior to 2003, when separate disclosure of auditor-provided tax service fees was mandated.
Author: Ling Lei Lisic Publisher: ISBN: Category : Languages : en Pages : 46
Book Description
Regulators do not prohibit auditors from providing tax services to their audit clients, provided these services are preapproved by audit committees. I examine whether the association between auditor-provided tax services and earnings management in tax expense varies with audit committee effectiveness. I develop a composite proxy for audit committee effectiveness by combining six audit committee characteristics. I find that auditor-provided tax services are less positively associated with earnings management in tax expense as audit committee effectiveness increases. My findings suggest that the knowledge spillover effect of auditor-provided tax services is more likely to dominate the independence impairment effect when auditor-provided tax services are preapproved by more effective audit committees.
Author: Ahsan Habib Publisher: ISBN: Category : Languages : en Pages :
Book Description
This paper examines whether auditor-provided tax services affect stock price crash risk: an important consideration for stock investors. Provision of tax services by incumbent auditors could accentuate or attenuate crash risk depending on whether such services give rise to knowledge spillover or impair auditor independence. The study investigates two channels through which tax services might affect crash risk: earnings management in tax expenses, and tax avoidance. Also examined, is whether the association between tax services and crash risk is moderated by the particular business strategy that organizations pursue. A two-stage model is used to control for the potential endogeneity inherent in the selection of auditors for tax services. Empirical findings reveal that auditor-provided tax services attenuate crash risk by constraining both earnings management in tax expenses and tax avoidance. Further evidence shows that auditor-provided tax services reduce crash risk for firms following innovator business strategies. Taken together, empirical findings reported in this study support knowledge spillover benefits, i.e. insights gained from tax services can enhance audit effectiveness.
Author: Alan J. Auerbach Publisher: Cambridge University Press ISBN: 1139464515 Category : Business & Economics Languages : en Pages : 401
Book Description
This book was first published in 2007. Most countries levy taxes on corporations, but the impact - and therefore the wisdom - of such taxes is highly controversial among economists. Does the burden of these taxes fall on wealthy shareowners, or is it passed along to those who work for, or buy the products of, corporations? Can a country with high corporate taxes remain competitive in the global economy? This book features research by leading economists and accountants that sheds light on these and related questions, including how taxes affect corporate dividend policy, stock market value, avoidance, and evasion. The studies promise to inform both future tax policy and regulatory policy, especially in light of the Sarbanes-Oxley Act and other actions by the Securities and Exchange Commission that are having profound effects on the market for tax planning and auditing in the wake of the well-publicized accounting scandals in Enron and WorldCom.
Author: Preeti Choudhary
Author: Preeti Choudhary
Author: Kevin A. Diehl
Author: Pieter von Wielligh
Author: Thomas C. Omer
Author: Ling Lei Lisic
Author: United States. Office of Internal Revenue
Author: United States. General Accounting Office
Author: 
Author: Ahsan Habib
Author: Alan J. Auerbach