Download or read book Auditor Provided Tax Services and Income Tax Estimation Error written by Preeti Choudhary and published by . This book was released on 2017 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Why Higher Levels of Auditor Provided Tax Services Lower the Likelihood of Restatements written by Kevin A. Diehl and published by . This book was released on 2014 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Auditing Fundamentals in a South African Context written by Pieter von Wielligh and published by Oxford University Press, USA. This book was released on 2020-03 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Auditor Provided Tax Services written by Thomas C. Omer and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book The Collection Process income Tax Accounts written by United States. Internal Revenue Service and published by . This book was released on 1978 with total page 4 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Auditor Provided Tax Services and Earnings Management in Tax Expense written by Ling Lei Lisic and published by . This book was released on 2014 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book The Audit Control Program a Summary of Preliminary Results written by United States. Office of Internal Revenue and published by . This book was released on 1951 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financial Audit written by United States. General Accounting Office and published by . This book was released on 1994 with total page 138 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Auditor Provided Tax Services and Stock Price Crash Risk written by Ahsan Habib and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Taxing Corporate Income in the 21st Century written by Alan J. Auerbach and published by Cambridge University Press. This book was released on 2007-04-16 with total page 401 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Corporate Tax Aggressiveness Auditor Provided Tax Services and Audit Quality written by Kellie M. Carr and published by . This book was released on 2017 with total page 145 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using tax accrual quality as a proxy for audit quality, I investigate whether companies that significantly decreased APTS surrounding the effective date of the Public Company Accounting Oversight Board's 2006 Rules on Ethics, Independence, and Tax Services experienced an improvement in audit quality after the change. Given the specific target of the PCAOB 2006 restrictions is companies aggressively avoiding taxes with the assistance of APTS, I also investigate whether companies associated with tax aggressive services are also more likely to experience an improvement in audit quality following the reductions in APTS. Results suggest an increase in audit quality due to a reduction in economic bonding following APTS restrictions. Consistent with the economic bonding theory, companies that significantly reduced APTS experienced a larger improvement in audit quality after the change compared to companies that did not significantly reduce APTS. For tax aggressive companies, those that reduced APTS did experience a significant increase in audit quality after the change compared to tax aggressive companies that did not significantly reduce APTS. Moreover, companies considered important tax clients by their audit firms that significantly reduced APTS did experience a marginally greater increase in audit quality after the change compared to other important tax clients that did not significantly reduce APTS. Overall, my results indicate that the PCOAB 2006 restrictions were effective in decreasing APTS and economic bonding, thereby leading to improved audit quality, especially among companies associated with tax aggressive services. Accordingly, concerns for loss of knowledge spillover seem to be minimal. There are few studies that investigate the effectiveness of the PCAOB 2006 restrictions on audit quality. Therefore, my study fills this void by using a tax specific measure of audit quality, tax accrual quality, to specifically examine the target of the restrictions-- audit clients that are associated with aggressive tax services. My study confirms and expands APTS, economic bonding, audit quality, tax accrual quality, and tax aggressive research, and also provides insight into and support for current policy debates concerning APTS and tax aggressive services.

Download or read book The Impact of Tax Services on Auditors Fraud Risk Assessments written by Michael Favere-Marchesi and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examined whether providing tax services to an audit client affects auditors' fraud-risk assessment. A case was administered to audit partners and senior managers of small and medium-sized firms that provide both audit and tax services. Participants were asked to assess the risk of fraudulent financial reporting for a hypothetical audit client. The provision of tax services and the size of the client fees in relation to the audit partner's annual billings were varied and participants randomly assigned to three experimental conditions.Consistent with expectations, auditors whose firm also provided tax services to the audit client reported a significantly lower fraud-risk assessment than auditors whose firm provided no tax services to the audit client. Further, with the provision of tax services to the audit client, auditors' fraud-risk assessment was inversely related to the relative size of the client fees.

Download or read book Is There an Association Between Earnings Management and Auditor Provided Tax Services written by Gopal V. Krishnan and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The issue of whether auditor-provided nonaudit services enhance or exacerbate financial reporting quality has been intensely debated among the regulators, auditors, investors, academic researchers, and the media. In 2006, the SEC approved the rules proposed by the PCAOB limiting the tax services that incumbent auditors can offer to their clients. We contribute to this debate by examining whether auditor-provided tax services mitigate earnings management. We find a negative and significant relation between earnings management (loss avoidance) and tax fee paid to the incumbent auditor. Our results are consistent with knowledge spillover, i.e., when the same audit firm provides both audit and tax services insight learned from providing tax services can contribute to audit quality.

Download or read book Government Auditing Standards 2018 Revision written by United States Government Accountability Office and published by Lulu.com. This book was released on 2019-03-24 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Tax Services as a Trojan Horse in the Auditor Independence Provisions of Sarbanes Oxley written by Matthew J. Barrett and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article argues that the failure of the Sarbanes-Oxley Act of 2002 (SOx) to prohibit auditors for public companies from also providing tax services to audit clients or their executives and selling tax shelters to anyone remains a Trojan horse that threatens both the investing public and the auditing profession. Although SOx enacted several reforms designed to enhance auditor independence, the legislation and implementing regulations that the Securities and Exchange Commission (SEC) subsequently promulgated allow an auditor for a publicly traded company to provide tax services to the company as long as the audit committee preapproves the engagement. As the most vocal advocate in the legal academy for increased auditor independence, Professor Bernard Wolfman has repeatedly argued that a conflict of interest arises anytime an auditor offers significant tax advice to an audit client or promotes a tax shelter to anyone. Going beyond Professor Wolfman''s recommendations and in an effort to prevent further damage to the auditing profession's reputation, the public's confidence in the capital markets in this country, and the U.S. economy generally, this article argues that auditors for public companies should also not provide tax compliance services to audit clients or their executives. Accordingly, this article urges individual auditors, auditing firms, the accounting profession, audit committees, investors, and, if necessary, the newly created Public Company Accounting Oversight Board (PCAOB) and the SEC, to take those actions necessary to preclude auditors for public companies from providing tax services to audit clients or their executives and from promoting tax shelters to anyone. While various tax services present potential conflicts of interest in differing degrees, drawing lines between different types of tax services, such as tax return preparation, tax consulting, and tax planning, presents very significant practical difficulties. Recognizing these practical difficulties, this article recommends a "bright line," best practice that would bar registered public accounting firms from rendering tax services to audit clients or their executives and promoting tax shelters to anyone. The article suggests that if an auditing firm embraces and advertises such a "total independence" policy, the firm may gain a competitive advantage in attracting new audit clients. Such an approach might even allow one or more non-Big Four accounting firms to compete favorably with the Big Four, reducing consolidation and increasing competition in the industry.

Download or read book Propensity Score Analysis written by Shenyang Guo and published by SAGE. This book was released on 2015 with total page 449 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides readers with a systematic review of the origins, history, and statistical foundations of Propensity Score Analysis (PSA) and illustrates how it can be used for solving evaluation and causal-inference problems.

Download or read book The Effect of Disclosing Audit Quality Control Deficiencies on Non Audit Tax Services written by Jaehan Ahn and published by . This book was released on 2020 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether public disclosure of Deloitte 2007 PCAOB Part II report, which identifies quality control deficiencies related to audits of income tax accounts, affects Deloitte's auditor-provided tax services (APTS). Using a difference-in-differences model, we document a 17 percent lower likelihood of Deloitte's audit clients employing APTS relative to clients of other annually inspected firms when the report is made public. We also find that the dampening effect of publicly disclosing the Part II report on Deloitte's APTS is more evident among audit clients paying higher non-audit fees to auditors and those with more complex tax planning. These results suggest that revealing income tax-specific quality control deficiencies prompts audit clients to revise upward (downward) their expected costs (benefits) of perceived auditor independence impairment (knowledge spillover) stemming from APTS. Overall, our study suggests that public disclosure of audit firm-wide quality control deficiencies pertaining to audits of income tax accounts imposes a collateral damage to the inspected firm's non-audit tax services, thereby providing a more complete understanding of the consequences of the PCAOB's communications about quality control deficiencies in Part II reports.