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Author: Sabrina Chi Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
The complexity and frequent changes of multi-jurisdictional tax requirements generate a demand for a robust supporting information environment. If a firm's information technology (IT) environment is not able to handle these tax complexities, that inability increases the risk of errors in the firm's financial accounting for income taxes and the risk of ineffective tax avoidance strategies. We initially investigate the relation between IT-related material weaknesses (MWs) and tax-related MWs and find that having an IT-related MW is associated with a higher probability of having a tax-related MW. We then examine whether the quality of a firm's IT environment influences its tax avoidance effectiveness. In addition, we find firms that restate their financial statements are more likely to disclose IT-related and tax-related MWs in advance of the year they announce that they must restate. We also show that having an IT-related MW hinders tax avoidance and that firms having a CFO with IT expertise or receiving the Most Admired Knowledge Enterprise award are also positively associated with tax avoidance. Our results are consistent with the idea that when firms have higher quality IT environments, they are more likely to have more effective controls over the tax function and similarly their tax avoidance efforts are more effective.
Author: Sabrina Chi Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
The complexity and frequent changes of multi-jurisdictional tax requirements generate a demand for a robust supporting information environment. If a firm's information technology (IT) environment is not able to handle these tax complexities, that inability increases the risk of errors in the firm's financial accounting for income taxes and the risk of ineffective tax avoidance strategies. We initially investigate the relation between IT-related material weaknesses (MWs) and tax-related MWs and find that having an IT-related MW is associated with a higher probability of having a tax-related MW. We then examine whether the quality of a firm's IT environment influences its tax avoidance effectiveness. In addition, we find firms that restate their financial statements are more likely to disclose IT-related and tax-related MWs in advance of the year they announce that they must restate. We also show that having an IT-related MW hinders tax avoidance and that firms having a CFO with IT expertise or receiving the Most Admired Knowledge Enterprise award are also positively associated with tax avoidance. Our results are consistent with the idea that when firms have higher quality IT environments, they are more likely to have more effective controls over the tax function and similarly their tax avoidance efforts are more effective.
Author: Andrew M. Bauer Publisher: ISBN: Category : Languages : en Pages : 158
Book Description
Internal control disclosures mandated by section 404 of the Sarbanes-Oxley Act (SOX) are designed to provide information about a firm's financial reporting quality and in doing so may offer information on firm-specific tax planning activities. Internal control weaknesses disclosed under SOX are frequently related to a firm's tax function (Ge and McVay, 2005; Gleason, Pincus and Rego, 2010) and thus raise the question of whether or not these frequent problems affect corporate tax avoidance. In this thesis, I test hypotheses that tax-related disclosures, particularly those that contain company-level internal control weaknesses (ICWs), provide information with respect to long-run tax avoidance. Furthermore, I test hypotheses that the combination of internal control quality and aggressive tax avoidance aid in assessing shareholder returns. To conduct these tests, I collect and construct firm-level SOX disclosure data from 2004 to 2006 across 1,286 publicly-owned corporations. I begin with an empirical analysis of the association between tax avoidance and firm-level ICWs and generally find that the presence of tax ICWs and company-level tax ICWs constrain long-run tax avoidance. For firms with low cash constraints however, company-level tax ICWs appear to lead to an increase in tax avoidance. Nevertheless, subsequent analysis of monthly abnormal returns implies that the stock market reacts negatively to the disclosure of company-level tax ICWs, regardless of whether or not tax aggressiveness is also present. This thesis contributes to the literature by documenting the first evidence that internal control disclosures provide information regarding firm-level tax planning. Although the number of internal control weakness disclosures is decreasing over time, the availability of these SOX disclosures represents a previously unavailable opportunity to examine and further understand internal governance mechanisms within the firm and their influence on tax planning. In addition, this thesis further corroborates prior literature that argues for the importance of the pervasiveness of internal control weaknesses by showing that the pervasive, company-level tax internal control weaknesses are associated with tax avoidance and lower shareholder returns. Finally, my dissertation implies that the presence of tax internal control weaknesses constrains tax avoidance and thus a focus on improving internal controls could help improve the tax planning function. However, my firm-level analysis also implies that effective tax planning is a sustainable process and thus a firm and its stakeholders may require several periods before the full benefits of these improvements are realized.
Author: Daniel Lynch Publisher: ISBN: 9781303864858 Category : Corporations Languages : en Pages : 86
Book Description
This study investigates the effect of increases in firm-level investments in the corporate tax function to address financial reporting concerns on the magnitude and timing of firm's tax avoidance. I exploit the novel setting of the remediation of tax-related material weaknesses in internal control (MWs) as a shock that motivates firms to increase investments in the corporate tax function. I examine the impact of increases in these investments on the magnitude and timing of future payoffs in the form of increased tax avoidance. I find no evidence of increases in tax function investments contemporaneously impacting tax avoidance. However, I do find that investments in the income tax function are associated with greater levels of future tax avoidance. Specifically, I find firms making investments in year t have 4-8 percentage point lower 3-year cash and GAAP effective tax rates (ETR) measured at time t +1 to t +3 compared to their industry peers. Descriptive results suggest the primary drivers of this increase in future tax avoidance are lower foreign and state tax expense. I also hand-collect internal control disclosures to investigate how firms remediate tax-related MWs. The results suggest the most common types of investments are in outside consulting and new personnel, including hiring a new tax director. I find that both external and internal tax function investments are positively associated with future tax avoidance, with no differential impact on future ETRs. Results also indicate that risk, complexity, and a lack of resources are predictors of engaging an external service provider. These results demonstrate the magnitude and timing lag of payoffs on tax function investments and illustrate how strengthening internal controls can improve firm performance via increased tax avoidance. -- Abstract.
Author: OECD Publisher: OECD Publishing ISBN: 9264424083 Category : Languages : en Pages : 355
Book Description
This report is the ninth edition of the OECD's Tax Administration Series. It provides internationally comparative data on aspects of tax systems and their administration in 59 advanced and emerging economies.
Author: OECD Publisher: OECD Publishing ISBN: 9264755020 Category : Languages : en Pages : 68
Book Description
Unlocking what drives tax morale – the intrinsic willingness to pay tax – can greatly assist governments in the design of tax policies and their administration, particularly in developing countries where compliance rates are low. This report builds on previous OECD research to identify some of the key socio-economic and institutional drivers of tax morale across developing countries, and seeks to test for evidence of the social contract by examining the impact of public services on tax morale. It also uses new data on tax certainty as an entry point to explore tax morale in businesses, where existing research is very limited. Finally, the report identifies a range of factors related to the tax system that may affect business decision making, how they vary across regions, and suggests some areas for future research. Overall, the report provides a range of suggestions for further work, and how tax morale considerations can be integrated into holistic tax compliance strategies.
Author: Daoguang Yang Publisher: Taylor & Francis ISBN: 1003848605 Category : Business & Economics Languages : en Pages : 194
Book Description
By examining two different modes of internal control and the fundamentals of risk management, this book analyses the role of internal control in financing, investment, profit distribution, and corporate strategies through China's experience. In doing so, it confirms the effectiveness and superiority of internal control over operation and management. The book compares the various internal control methods used in China and the USA, namely, operation and management-oriented versus financial reporting-oriented approaches. It also discusses the differences in corporate risk attitudes and behaviours under the two approaches. The author then proposes the hyper-correction hypothesis and the trimming hypothesis. Empirical findings regarding corporate cash policy, mergers and acquisitions, tax avoidance, and diversification strategy reveal that internal control in China does not result in undue risk aversion but instead manages enterprise risk within a reasonable capacity. These results support the trimming hypothesis and demonstrate that internal control is a useful risk management tool. The title will appeal to students, academics, and accounting professionals interested in internal control (risk management), accounting, auditing and corporate finance, regulation and governance.
Author: Andrew Okello Publisher: International Monetary Fund ISBN: 1475525699 Category : Business & Economics Languages : en Pages : 38
Book Description
Modern tax administrations seek to optimize tax collections while minimizing administration costs and taxpayer compliance costs. Experience shows that voluntary compliance is best achieved through a system of self-assessment. Many tax administrations have introduced self-assessment principles in the income tax law but the legal authority is not being consistently applied. They continue to rely heavily on “desk” auditing a majority of tax returns, while risk management practices remain largely underdeveloped and/or underutilized. There is also plenty of opportunity in many countries to enhance the design and delivery of client-focused taxpayer service programs, and better engage with the private sector and other stakeholders.
Author: Ms.Era Dabla-Norris Publisher: International Monetary Fund ISBN: 1475595166 Category : Business & Economics Languages : en Pages : 40
Book Description
Tax compliance costs tend to be disproportionately higher for small and young businesses. This paper examines how the quality of tax administration affects firm performance for a large sample of firms in emerging market and developing economies. We construct a novel, internationally comparable, and multidimensional index of tax administration quality (the TAQI) using information from the Tax Administration Diagnostic Assessment Tool. We show that better tax administration attenuates the productivity gap of small and young firms relative to larger and older firms, a result that is robust to controlling for other aspects of tax policy and of economic governance, alternative definitions of small and young firms, and measures of the quality of tax administration. From a policy perspective, we provide evidence that countries can reap growth and productivity dividends from improvements in tax administration that lower compliance costs faced by firms.
Author: United States Government Accountability Office Publisher: Lulu.com ISBN: 0359536395 Category : Reference Languages : en Pages : 234
Book Description
Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.
Author: Sabrina Chi
Author: Sabrina Chi
Author: Andrew M. Bauer
Author: Daniel Lynch
Author: OECD
Author: OECD
Author: Daoguang Yang
Author: 
Author: Andrew Okello
Author: Ms.Era Dabla-Norris
Author: United States Government Accountability Office