George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer
- Published in print:
- 2006
- Published Online:
- February 2006
- ISBN:
- 9780195305838
- eISBN:
- 9780199783342
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195305833.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book provides readers with reasonably concise descriptions of the state of global markets, the benefits and limitations of financial accounting and accounting/auditing standards, and the ...
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This book provides readers with reasonably concise descriptions of the state of global markets, the benefits and limitations of financial accounting and accounting/auditing standards, and the development, status, and current policy issues of corporate financial reporting in major countries and the European Union. The globalization of financial markets has contributed to a growing consensus that national financial reporting standards should give way to a single, harmonized set of global reporting standards. This book takes a more practical approach and reaches a different conclusion: that global standards are unlikely to be achieved, and in any event, are not likely to remain unified in the face of continued changes in markets and financial practices. National accounting standards are likely to continue to be relevant for the foreseeable future, and for that reason, the book discusses the national systems and their origins in some detail. The authors also consider a range of other substantive reporting issues, notably the debate over the issue of “fair value” measurement of assets and liabilities, which the authors reject in favor of a system that marks to market only those assets with deep traded markets, coupled with additional disclosures, where relevant.Less
This book provides readers with reasonably concise descriptions of the state of global markets, the benefits and limitations of financial accounting and accounting/auditing standards, and the development, status, and current policy issues of corporate financial reporting in major countries and the European Union. The globalization of financial markets has contributed to a growing consensus that national financial reporting standards should give way to a single, harmonized set of global reporting standards. This book takes a more practical approach and reaches a different conclusion: that global standards are unlikely to be achieved, and in any event, are not likely to remain unified in the face of continued changes in markets and financial practices. National accounting standards are likely to continue to be relevant for the foreseeable future, and for that reason, the book discusses the national systems and their origins in some detail. The authors also consider a range of other substantive reporting issues, notably the debate over the issue of “fair value” measurement of assets and liabilities, which the authors reject in favor of a system that marks to market only those assets with deep traded markets, coupled with additional disclosures, where relevant.
Ralf Ewert
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199260621
- eISBN:
- 9780191601668
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199260621.003.0010
- Subject:
- Economics and Finance, Financial Economics
Despite reservations voiced by the scientific community, the perception that combining non-audit services (NAS) and auditing for the same client may be largely responsible for recently observed ...
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Despite reservations voiced by the scientific community, the perception that combining non-audit services (NAS) and auditing for the same client may be largely responsible for recently observed accounting and audit failures seems to have gained momentum, and currently, it appears that any auditor offering NAS to auditees automatically endangers ‘independence in appearance’. This chapter addresses the question of whether such opinions can be justified by existing research on the issue of combining NAS and auditing. While there are already some reviews of former empirical papers, there is essentially no survey of the related theoretical research and the more recent empirical work. Here, the focus is mainly on the theoretical side, which is critically reviewed and somewhat extended in Section 2 of the chapter, while Section 3 reviews and interprets some new empirical work in the light of the theories presented before. The final section presents conclusions and directions for further research; the conclusion is that there is no evidence that a simultaneous offering of auditing and NAS to the same client unequivocally and systematically impairs auditor independence, and that, in fact, there are instances where NAS are likely to enhance the quality of the audit because they increase the auditors’ capital that is at stake.Less
Despite reservations voiced by the scientific community, the perception that combining non-audit services (NAS) and auditing for the same client may be largely responsible for recently observed accounting and audit failures seems to have gained momentum, and currently, it appears that any auditor offering NAS to auditees automatically endangers ‘independence in appearance’. This chapter addresses the question of whether such opinions can be justified by existing research on the issue of combining NAS and auditing. While there are already some reviews of former empirical papers, there is essentially no survey of the related theoretical research and the more recent empirical work. Here, the focus is mainly on the theoretical side, which is critically reviewed and somewhat extended in Section 2 of the chapter, while Section 3 reviews and interprets some new empirical work in the light of the theories presented before. The final section presents conclusions and directions for further research; the conclusion is that there is no evidence that a simultaneous offering of auditing and NAS to the same client unequivocally and systematically impairs auditor independence, and that, in fact, there are instances where NAS are likely to enhance the quality of the audit because they increase the auditors’ capital that is at stake.
Roy C. Smith and Ingo Walter
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780195171679
- eISBN:
- 9780199783618
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195171675.003.0007
- Subject:
- Economics and Finance, Microeconomics
Accounting firms and auditors play a critical role in delivering transparency to capital allocation decisions involving public corporations. Although the source of financial information is the ...
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Accounting firms and auditors play a critical role in delivering transparency to capital allocation decisions involving public corporations. Although the source of financial information is the company itself, a public company in the US is required under federal securities laws to retain an independent accounting firm to audit its accounts and to certify that the company’s financial statements “present fairly, in all material respects, the financial position of the company in accordance with generally accepted accounting principles applied in the United States of America”. This chapter traces the evolution of the accounting industry, how the accounting profession operated in the late 20th century, leading to its virtual collapse in the early 2000s, and the regulatory reforms and measures aimed at assuring its recovery.Less
Accounting firms and auditors play a critical role in delivering transparency to capital allocation decisions involving public corporations. Although the source of financial information is the company itself, a public company in the US is required under federal securities laws to retain an independent accounting firm to audit its accounts and to certify that the company’s financial statements “present fairly, in all material respects, the financial position of the company in accordance with generally accepted accounting principles applied in the United States of America”. This chapter traces the evolution of the accounting industry, how the accounting profession operated in the late 20th century, leading to its virtual collapse in the early 2000s, and the regulatory reforms and measures aimed at assuring its recovery.
George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer
- Published in print:
- 2006
- Published Online:
- February 2006
- ISBN:
- 9780195305838
- eISBN:
- 9780199783342
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195305833.003.0002
- Subject:
- Economics and Finance, Financial Economics
Investors, creditors, government officials, and others require information to evaluate companies’ economic position, performance, and prospects. This chapter examines the usefulness of financial ...
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Investors, creditors, government officials, and others require information to evaluate companies’ economic position, performance, and prospects. This chapter examines the usefulness of financial accounting statements and their limitations in providing this information, particularly measures of economic values. The essential features of the traditional market-transaction, cost-based accounting system, and the benefits and costs of fair-value accounting and of audits and attestations by independent public accountants (IPAs) are described and evaluated.Less
Investors, creditors, government officials, and others require information to evaluate companies’ economic position, performance, and prospects. This chapter examines the usefulness of financial accounting statements and their limitations in providing this information, particularly measures of economic values. The essential features of the traditional market-transaction, cost-based accounting system, and the benefits and costs of fair-value accounting and of audits and attestations by independent public accountants (IPAs) are described and evaluated.
George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer
- Published in print:
- 2006
- Published Online:
- February 2006
- ISBN:
- 9780195305838
- eISBN:
- 9780199783342
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195305833.003.0010
- Subject:
- Economics and Finance, Financial Economics
Standard setters are attempting to structure a single set of global accounting standards. This chapter examines the costs and benefits of such convergence and finds that it is not a viable solution. ...
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Standard setters are attempting to structure a single set of global accounting standards. This chapter examines the costs and benefits of such convergence and finds that it is not a viable solution. It outlines a system of “constrained competition” in standards, within which a small set of high-quality standards would offer the most feasible and flexible setting that would cope with increasingly global capital markets. Three alternatives of such competition — among countries, between exchanges, and competition at the firm level — are outlined and discussed. The chapter also discusses harmonization of audit oversight and enforcement worldwide, and stresses that quality assurance is more important than the convergence of accounting standards.Less
Standard setters are attempting to structure a single set of global accounting standards. This chapter examines the costs and benefits of such convergence and finds that it is not a viable solution. It outlines a system of “constrained competition” in standards, within which a small set of high-quality standards would offer the most feasible and flexible setting that would cope with increasingly global capital markets. Three alternatives of such competition — among countries, between exchanges, and competition at the firm level — are outlined and discussed. The chapter also discusses harmonization of audit oversight and enforcement worldwide, and stresses that quality assurance is more important than the convergence of accounting standards.
George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer
- Published in print:
- 2006
- Published Online:
- February 2006
- ISBN:
- 9780195305838
- eISBN:
- 9780199783342
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195305833.003.0003
- Subject:
- Economics and Finance, Financial Economics
Following a description of the ways that standards benefit users and producers of financial statements, this chapter considers alternative organizational procedures for setting those standards. The ...
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Following a description of the ways that standards benefit users and producers of financial statements, this chapter considers alternative organizational procedures for setting those standards. The benefits and costs of having standards determined by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) rather than by professional accountancy organizations are analyzed. Principles-based versus rules-based accounting standards are also examined.Less
Following a description of the ways that standards benefit users and producers of financial statements, this chapter considers alternative organizational procedures for setting those standards. The benefits and costs of having standards determined by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) rather than by professional accountancy organizations are analyzed. Principles-based versus rules-based accounting standards are also examined.
George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer
- Published in print:
- 2006
- Published Online:
- February 2006
- ISBN:
- 9780195305838
- eISBN:
- 9780199783342
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195305833.003.0004
- Subject:
- Economics and Finance, Financial Economics
This chapter reviews the rules governing financial disclosure by corporations in the United States. It begins with an overview of state regulation (which is still in force) and then turns to federal ...
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This chapter reviews the rules governing financial disclosure by corporations in the United States. It begins with an overview of state regulation (which is still in force) and then turns to federal regulation, which began in 1933. The public securities markets are described and the Securities and Exchange Commission’s (SEC) rules governing financial disclosure of public corporations are outlined. Standard setting by the American Institute of Certified Public Accountants (AICPA), the Financial Accounting Standards Board (FASB), and the Public Company Accounting Oversight Board (PCAOB), and investor protection and corporate governance are considered next. Current issues such as the scope of auditing practices, auditor independence, audit failures, principles- versus rules-based accounting standards, and convergence of U.S. and international standards are discussed.Less
This chapter reviews the rules governing financial disclosure by corporations in the United States. It begins with an overview of state regulation (which is still in force) and then turns to federal regulation, which began in 1933. The public securities markets are described and the Securities and Exchange Commission’s (SEC) rules governing financial disclosure of public corporations are outlined. Standard setting by the American Institute of Certified Public Accountants (AICPA), the Financial Accounting Standards Board (FASB), and the Public Company Accounting Oversight Board (PCAOB), and investor protection and corporate governance are considered next. Current issues such as the scope of auditing practices, auditor independence, audit failures, principles- versus rules-based accounting standards, and convergence of U.S. and international standards are discussed.
George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer
- Published in print:
- 2006
- Published Online:
- February 2006
- ISBN:
- 9780195305838
- eISBN:
- 9780199783342
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195305833.003.0007
- Subject:
- Economics and Finance, Financial Economics
The EU has for a long time strived to harmonize the financial disclosure of companies headquartered in the EU member states. However, financial reporting in these states continues to differ, ...
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The EU has for a long time strived to harmonize the financial disclosure of companies headquartered in the EU member states. However, financial reporting in these states continues to differ, reflecting the ongoing role of national accounting traditions and regulatory structures. This chapter surveys both the areas where rules have been harmonized and those where national differences remain. The discussion highlights many of the issues that likely to arise in efforts to achieve harmonized rules on a global scale.Less
The EU has for a long time strived to harmonize the financial disclosure of companies headquartered in the EU member states. However, financial reporting in these states continues to differ, reflecting the ongoing role of national accounting traditions and regulatory structures. This chapter surveys both the areas where rules have been harmonized and those where national differences remain. The discussion highlights many of the issues that likely to arise in efforts to achieve harmonized rules on a global scale.
Christian Leuz, Dieter Pfaff, and Anthony Hopwood (eds)
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199260621
- eISBN:
- 9780191601668
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199260621.001.0001
- Subject:
- Economics and Finance, Financial Economics
The book focuses on key issues in accounting, setting them in the context of current accounting debates and trends. It makes the point that although, for the most part, we have accepted the ...
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The book focuses on key issues in accounting, setting them in the context of current accounting debates and trends. It makes the point that although, for the most part, we have accepted the impartiality and objectivity of accounting, we have not recognized how accounting systems are embedded in a country’s economic and legal framework, much of which is in turn shaped by political processes. This web of interactions results in complex economic and political questions that require accounting researchers to focus on several related trends: information economics, regulatory economics, sociology, and political science. Although considerable progress has been made, many fundamental questions are still subject to debate, and in the book leading international scholars address a number of these: what is the role of accounting in security valuation, decision making, and contracting; what can we learn from economics-based research in accounting; what is the role of auditing and how can accounting standards be enforced; what are the cost and benefits of accounting and disclosure regulation; what is the role of accounting in society; how does lobbying affect the political process of standard setting; and what are the consequences of the internationalization of standard setting?Less
The book focuses on key issues in accounting, setting them in the context of current accounting debates and trends. It makes the point that although, for the most part, we have accepted the impartiality and objectivity of accounting, we have not recognized how accounting systems are embedded in a country’s economic and legal framework, much of which is in turn shaped by political processes. This web of interactions results in complex economic and political questions that require accounting researchers to focus on several related trends: information economics, regulatory economics, sociology, and political science. Although considerable progress has been made, many fundamental questions are still subject to debate, and in the book leading international scholars address a number of these: what is the role of accounting in security valuation, decision making, and contracting; what can we learn from economics-based research in accounting; what is the role of auditing and how can accounting standards be enforced; what are the cost and benefits of accounting and disclosure regulation; what is the role of accounting in society; how does lobbying affect the political process of standard setting; and what are the consequences of the internationalization of standard setting?
John Kay
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198292227
- eISBN:
- 9780191596520
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198292228.003.0017
- Subject:
- Economics and Finance, Microeconomics
This chapter introduces the concept of the strategic audit. This begins with the identification of the company's distinctive capabilities and the subsequent selection of markets that can make the ...
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This chapter introduces the concept of the strategic audit. This begins with the identification of the company's distinctive capabilities and the subsequent selection of markets that can make the best use of them. Finally, it is recognized that for these distinctive capabilities to create true competitive advantage, they need to be both sustainable and their added value appropriable by the company.Less
This chapter introduces the concept of the strategic audit. This begins with the identification of the company's distinctive capabilities and the subsequent selection of markets that can make the best use of them. Finally, it is recognized that for these distinctive capabilities to create true competitive advantage, they need to be both sustainable and their added value appropriable by the company.
John Kay
- Published in print:
- 1995
- Published Online:
- November 2003
- ISBN:
- 9780198289883
- eISBN:
- 9780191718205
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/019828988X.003.0018
- Subject:
- Economics and Finance, Microeconomics
This chapter introduces the concept of the strategic audit. It begins with the identification of the customers’ needs and characteristics, while, by understanding the value chain, costs, returns, and ...
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This chapter introduces the concept of the strategic audit. It begins with the identification of the customers’ needs and characteristics, while, by understanding the value chain, costs, returns, and the opportunity to add value are explored. The chapter undertakes this exercise for four European industries—Italian knitwear, airlines, retail banking, and champagne.Less
This chapter introduces the concept of the strategic audit. It begins with the identification of the customers’ needs and characteristics, while, by understanding the value chain, costs, returns, and the opportunity to add value are explored. The chapter undertakes this exercise for four European industries—Italian knitwear, airlines, retail banking, and champagne.
John Kay
- Published in print:
- 1995
- Published Online:
- November 2003
- ISBN:
- 9780198289883
- eISBN:
- 9780191718205
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/019828988X.003.0019
- Subject:
- Economics and Finance, Microeconomics
Following the understanding of the market, the strategic audit focuses on the firm itself. Using the examples of British Airways and Benetton, this chapter illustrates how a deep understanding of the ...
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Following the understanding of the market, the strategic audit focuses on the firm itself. Using the examples of British Airways and Benetton, this chapter illustrates how a deep understanding of the firm's distinctive capabilities and strategic assets defines its corporate strategy and describes the business it should be in.Less
Following the understanding of the market, the strategic audit focuses on the firm itself. Using the examples of British Airways and Benetton, this chapter illustrates how a deep understanding of the firm's distinctive capabilities and strategic assets defines its corporate strategy and describes the business it should be in.
Alfred Wagenhofer
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199260621
- eISBN:
- 9780191601668
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199260621.003.0001
- Subject:
- Economics and Finance, Financial Economics
The objective is to discuss the merits of analytical models in financial accounting research. Analytical models are particularly useful for gaining insights into situations that are characterized by ...
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The objective is to discuss the merits of analytical models in financial accounting research. Analytical models are particularly useful for gaining insights into situations that are characterized by strategic interactions of various decision-makers with information asymmetry and conflicting interests. Describes the common model structures used in this kind of research, typical assumptions, and major results of the models. Provides examples including aggregations, conservatism, earnings management, and auditing as a basis for an evaluation of the costs and benefits of analytical research. A major advantage is the ability to derive results that run counter to common wisdom, thus enhancing our understanding of real phenomena as well as identifying the conditions under which certain results hold or do not hold. Finally, it considers robustness issues and empirical testing of analytical results, and policy recommendations based on them.Less
The objective is to discuss the merits of analytical models in financial accounting research. Analytical models are particularly useful for gaining insights into situations that are characterized by strategic interactions of various decision-makers with information asymmetry and conflicting interests. Describes the common model structures used in this kind of research, typical assumptions, and major results of the models. Provides examples including aggregations, conservatism, earnings management, and auditing as a basis for an evaluation of the costs and benefits of analytical research. A major advantage is the ability to derive results that run counter to common wisdom, thus enhancing our understanding of real phenomena as well as identifying the conditions under which certain results hold or do not hold. Finally, it considers robustness issues and empirical testing of analytical results, and policy recommendations based on them.
Ashwani Deshpande
- Published in print:
- 2011
- Published Online:
- September 2012
- ISBN:
- 9780198072034
- eISBN:
- 9780199081028
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198072034.003.0005
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter discusses how economists define discrimination and how it can be measured in the labour market. The primary method is called the ‘decomposition method’, which focuses on the gap in ...
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This chapter discusses how economists define discrimination and how it can be measured in the labour market. The primary method is called the ‘decomposition method’, which focuses on the gap in average wages/earnings between social groups. Through an econometric technique, the researcher decomposes the wage gap between groups in order to determine how much of the gap is explained by differential group characteristics or endowments and how much is due to discrimination. The chapter also discusses the critiques of this method and examines additional new techniques, such as correspondence and audit studies, which are being used to gauge the extent of discriminatory attitudes and their manifestations during economic interactions.Less
This chapter discusses how economists define discrimination and how it can be measured in the labour market. The primary method is called the ‘decomposition method’, which focuses on the gap in average wages/earnings between social groups. Through an econometric technique, the researcher decomposes the wage gap between groups in order to determine how much of the gap is explained by differential group characteristics or endowments and how much is due to discrimination. The chapter also discusses the critiques of this method and examines additional new techniques, such as correspondence and audit studies, which are being used to gauge the extent of discriminatory attitudes and their manifestations during economic interactions.
H. Kent Baker, J. Clay Singleton, and E. Theodore Veit
- Published in print:
- 2010
- Published Online:
- May 2011
- ISBN:
- 9780195340372
- eISBN:
- 9780199894215
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195340372.003.0003
- Subject:
- Economics and Finance, Financial Economics
This chapter reviews the findings of published surveys of corporate executives showing the project evaluation methods used in capital budgeting. The chapter compares the findings to the theoretically ...
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This chapter reviews the findings of published surveys of corporate executives showing the project evaluation methods used in capital budgeting. The chapter compares the findings to the theoretically correct methods described and recommended in the academic literature. The goals are to identify past trends, ascertain current practices, and evaluate the existing gap between theory and practice. A major area of investigation concerns the use of various capital budgeting techniques (e.g. net present value, internal rate of return, and payback period). Other important areas of investigation include measuring and adjusting for project risk, using capital rationing, selecting hurdle rates, and conducting post audits. Additional survey research topics discussed include how firms measure project benefits, how firm goals relate to capital budgeting methods used, how firms consider future inflation in capital budgeting analysis, the use of real options, and methods of estimating residual value. While most studies discussed here focus on large U.S. firms, many focus on non-U.S. firms, multinational firms, multi-division firms, and small firms.Less
This chapter reviews the findings of published surveys of corporate executives showing the project evaluation methods used in capital budgeting. The chapter compares the findings to the theoretically correct methods described and recommended in the academic literature. The goals are to identify past trends, ascertain current practices, and evaluate the existing gap between theory and practice. A major area of investigation concerns the use of various capital budgeting techniques (e.g. net present value, internal rate of return, and payback period). Other important areas of investigation include measuring and adjusting for project risk, using capital rationing, selecting hurdle rates, and conducting post audits. Additional survey research topics discussed include how firms measure project benefits, how firm goals relate to capital budgeting methods used, how firms consider future inflation in capital budgeting analysis, the use of real options, and methods of estimating residual value. While most studies discussed here focus on large U.S. firms, many focus on non-U.S. firms, multinational firms, multi-division firms, and small firms.
George Kopits
- Published in print:
- 2013
- Published Online:
- January 2014
- ISBN:
- 9780199644476
- eISBN:
- 9780191749100
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199644476.003.0001
- Subject:
- Economics and Finance, Financial Economics
The author traces the common roots of fiscal watchdogs, namely, insufficient transparency in public finances. Traditionally, this problem has been dealt with by public audit institutions around the ...
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The author traces the common roots of fiscal watchdogs, namely, insufficient transparency in public finances. Traditionally, this problem has been dealt with by public audit institutions around the world. However, more recently, the aspiration of citizens in democratic societies, on the one hand, and the pressures from financial markets—in the light of the current urge in public indebtedness—on the other, have led to the establishment of a new generation of independent fiscal institutions entrusted with real-time monitoring of the soundness and consistency of fiscal policy. The relevance of these institutions is further underscored by initiatives in the European Union toward strengthening economic governance in member countries. The chapter provides a panoramic view of the volume and identifies some broad patterns and implications. Finally, it highlights the evolution of good practices that recently culminated in the OECD principles on independent fiscal institutions.Less
The author traces the common roots of fiscal watchdogs, namely, insufficient transparency in public finances. Traditionally, this problem has been dealt with by public audit institutions around the world. However, more recently, the aspiration of citizens in democratic societies, on the one hand, and the pressures from financial markets—in the light of the current urge in public indebtedness—on the other, have led to the establishment of a new generation of independent fiscal institutions entrusted with real-time monitoring of the soundness and consistency of fiscal policy. The relevance of these institutions is further underscored by initiatives in the European Union toward strengthening economic governance in member countries. The chapter provides a panoramic view of the volume and identifies some broad patterns and implications. Finally, it highlights the evolution of good practices that recently culminated in the OECD principles on independent fiscal institutions.
Joel Slemrod and Christian Gillitzer
- Published in print:
- 2014
- Published Online:
- May 2014
- ISBN:
- 9780262026727
- eISBN:
- 9780262319003
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262026727.003.0006
- Subject:
- Economics and Finance, Financial Economics
This chapter addresses tax-system instruments that are generally ignored in standard analyses, such as procedures for ensuring compliance, audit rates, penalties and reporting requirements. These ...
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This chapter addresses tax-system instruments that are generally ignored in standard analyses, such as procedures for ensuring compliance, audit rates, penalties and reporting requirements. These policy instruments include tax withholding, information reporting, and the assignment of remittance responsibility as well as public disclosure of tax liabilities and providing information to taxpayers. Recognizing these instruments highlights the central role in tax systems played by firms, and the importance of market transactions and the problems posed by the cash economy for tax enforcement. The chapter concludes by speculating on whether tax-system variation can explain the striking positive cross-country correlation between tax levels and per capita income.Less
This chapter addresses tax-system instruments that are generally ignored in standard analyses, such as procedures for ensuring compliance, audit rates, penalties and reporting requirements. These policy instruments include tax withholding, information reporting, and the assignment of remittance responsibility as well as public disclosure of tax liabilities and providing information to taxpayers. Recognizing these instruments highlights the central role in tax systems played by firms, and the importance of market transactions and the problems posed by the cash economy for tax enforcement. The chapter concludes by speculating on whether tax-system variation can explain the striking positive cross-country correlation between tax levels and per capita income.
Joel Slemrod and Christian Gillitzer
- Published in print:
- 2014
- Published Online:
- May 2014
- ISBN:
- 9780262026727
- eISBN:
- 9780262319003
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262026727.003.0008
- Subject:
- Economics and Finance, Financial Economics
This chapter considers some examples of how introducing administrative and compliance costs modifies and enriches formal normative analysis of the standard set of tax instruments. Examples covered ...
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This chapter considers some examples of how introducing administrative and compliance costs modifies and enriches formal normative analysis of the standard set of tax instruments. Examples covered include commodity taxation with compliance costs, optimal commodity tax enforcement, the optimal size of a tax collection agency, optimal audit rules, and optimal redistribution when avoidance behavior is heterogeneous.Less
This chapter considers some examples of how introducing administrative and compliance costs modifies and enriches formal normative analysis of the standard set of tax instruments. Examples covered include commodity taxation with compliance costs, optimal commodity tax enforcement, the optimal size of a tax collection agency, optimal audit rules, and optimal redistribution when avoidance behavior is heterogeneous.
Daniel J. Clarke and Stefan Dercon
- Published in print:
- 2016
- Published Online:
- June 2016
- ISBN:
- 9780198785576
- eISBN:
- 9780191827440
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198785576.003.0004
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Rules can promote decisive, timely action, but a rules-based system is only as good as the data that drive it. Because no rule is perfect, there should be some discretion to deal with situations in ...
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Rules can promote decisive, timely action, but a rules-based system is only as good as the data that drive it. Because no rule is perfect, there should be some discretion to deal with situations in which the rules fail. The challenge is to allow discretion without allowing people to game the system. The data need to be resistant to manipulation and strike the right balance between cost, speed, and reliability. Any data that could trigger action will depend on investments before a disaster in design of the data-collection system, including an audit function, and in the human and technological capacity to collect data in a timely manner. Three types of data could be used to trigger action: ground data on the damage to or losses of people and buildings, area average index data on damage and losses, or parametric indexes.Less
Rules can promote decisive, timely action, but a rules-based system is only as good as the data that drive it. Because no rule is perfect, there should be some discretion to deal with situations in which the rules fail. The challenge is to allow discretion without allowing people to game the system. The data need to be resistant to manipulation and strike the right balance between cost, speed, and reliability. Any data that could trigger action will depend on investments before a disaster in design of the data-collection system, including an audit function, and in the human and technological capacity to collect data in a timely manner. Three types of data could be used to trigger action: ground data on the damage to or losses of people and buildings, area average index data on damage and losses, or parametric indexes.
Sijbren Cnossen
- Published in print:
- 2019
- Published Online:
- September 2019
- ISBN:
- 9780198844075
- eISBN:
- 9780191879722
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198844075.003.0017
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Chapter 17 reviews various related but separable core administrative functions associated with the VAT: registration, filing, payment/collection, enforcement, and audit. It concludes with a brief ...
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Chapter 17 reviews various related but separable core administrative functions associated with the VAT: registration, filing, payment/collection, enforcement, and audit. It concludes with a brief note on fraud. How well these functions are performed will determine the VAT’s economic effects, its burden distribution, and its administrative efficacy (in terms of collection and compliance costs per unit of revenue). The discussion highlights the key issues and outlines some best practices. Last but not least, measures aimed at uncovering and prosecuting VAT fraud should be balanced by measures aimed at assisting honest taxpayers to meet their tax obligations and fast-tracking refunds to taxpayers with a good compliance record. Importantly, interest at commercial rates should be paid on late refunds.Less
Chapter 17 reviews various related but separable core administrative functions associated with the VAT: registration, filing, payment/collection, enforcement, and audit. It concludes with a brief note on fraud. How well these functions are performed will determine the VAT’s economic effects, its burden distribution, and its administrative efficacy (in terms of collection and compliance costs per unit of revenue). The discussion highlights the key issues and outlines some best practices. Last but not least, measures aimed at uncovering and prosecuting VAT fraud should be balanced by measures aimed at assisting honest taxpayers to meet their tax obligations and fast-tracking refunds to taxpayers with a good compliance record. Importantly, interest at commercial rates should be paid on late refunds.
