Academic literature on the topic 'Tax auditing'

The collection of taxes is something that affects almost every entity in society and often stir up heated feelings. Recent legislative changes have been made in Sweden to adjust to regulations in the European Union. These changes included the abolishment of mandatory auditing for small companies in 2011, leading to heavy debate regarding its effect on tax reduction. Has tax reduction increased when smaller companies are no longer under as heavy surveillance as in the past or is the effect negligible? This is the question that this thesis is trying to answer, namely: is there a connection between being audited and the level of tax reduction, measured as the effective tax rate, in which small Swedish companies partake in? Most of the previous research in the field is sparse when it comes to the effect this might have in the specific conditions of the Swedish market. These studies have mainly been conducted in an American setting and focuses either on large corporations and their reduction of tax liability or attempt to connect the characteristics of auditors with tax evasion. Some studies have been made in Sweden, dealing briefly with the matter but these studies have bypassed the connection between being audited and the level of tax reduction. With tax authorities trying to find new methods to refine their profiling of companies which reduce their tax liability, the thesis fits in well as an addition to both theory and practice. We have tested this connection by conducting a semi-quasi ex post facto experiment using a dataset containing annual reports from all small companies in the restaurant industry which is seen as the industry in which companies are most prone to tax reduction according to Swedish authorities (Skatteverket, 2014, p. 60-61). The dataset has then been altered in accordance with the studies by (Guenther 2014; Bianchi et al. 2014; Dalbor et al. 2004) which included winsorizing, cropping and removal of missing data. The studies of (Bianchi et al. 2014) and (Dalbor et al. 2004) were also used to form the control variables for the study. After the dataset was deemed fit for testing, STATA was used to statistically test the data. Initial results seemed to indicate that there was a positive significant correlation between being audited and the level of tax reduction of the company. However, the results of the propensity score matching based on company size indicated that the association was heavily reliant upon company size. We thus concluded that we cannot prove a statistically significant relationship between a company being audited and its level of tax reduction in the setting of our study. The implications of this finding are several. It helps to build onto existing knowledge regarding auditing’s effect on taxes paid as well as providing the tax authorities in Sweden with an insight into what indicators to use when streamlining their operations. Furthermore, it may add new arguments to be presented in the debate that has taken place in Sweden over the recent years following the legislative changes.

The strict and narrow scope of the general deduction formula may result in taxpayers being denied deductions for business expenditure, which are clearly and legitimately incurred in the course of operating their businesses, which in turn will result in an increase in tax costs, an important component of business costs. Although audit fees often fail the deductibility test, in general they are regarded by taxpayers as automatically deductible despite the fact that such fees were not incurred in the production of income. The deductibility of audit fees reached the High Court recently for the first time in the MTN case. It was argued by the South African Revenue Service (SARS) in this case that audit fees should never been allowed as a deduction because the role of an auditor does not relate to the production of income and that an auditor’s duty is restricted to verification of financial information ex post facto for the benefit of investors, creditors and other users of the financial information. The Court held that statutory audit fees should be deductible relying on the basis of the time spent during the audit in verifying deductible and non-deductible income. It is concluded by the author that law which creates uncertainty needs to be updated in keeping with the Government’s intention of creating a business environment in order to promote commerce and entrepreneurship. It is therefore proposed that all audit fees relating to statutory audits should be declared as a specific statutory deduction to ensure legal certainty.

In this study, I investigate the effect of auditor-provided tax services (ATS) on firms’ levels of book-tax differences and investors’ mispricing of book-tax differences. The joint provision of audit and tax services has been a controversial issue among regulators and academic researchers. Evidence on whether ATS improve or impair the overall accounting quality is inconclusive as a result of the specific testing circumstances involved in different studies. Book-tax differences capture managers’ earnings management and/or tax avoidance intended to maximize reported financial income and to minimize tax expense. Therefore, my first research question investigates whether ATS improve or impair audit quality by examining the relation between ATS and firms’ levels of book-tax differences. My results show that ATS are negatively related to book-tax differences, suggesting that ATS improve the overall audit quality and reduce aggressive financial and/or tax reporting. My second research question examines whether the improved earnings quality for firms acquiring ATS leads to reduced mispricing of book-tax differences among investors. Recent studies document that despite the rich information about firms’ future earnings contained in book-tax differences, investors process such information inefficiently, leading to systematic pricing errors among firms with large book-tax differences. My empirical evidence indicates that ATS mitigate such mispricing, with pricing errors being lower among firms acquiring ATS compared with firms without ATS. Collectively, these results support the notion that ATS improve audit quality through knowledge spillover. Moreover, the improved earnings quality among firms acquiring ATS in turn helps reduce investors’ mispricing of book-tax differences.

nÃo hÃ<br>Sendo a Auditoria Fiscal um instrumento ostensivo de combate a sonegaÃÃo, quer seja pela sua efetiva realizaÃÃo ou em consequÃncia da percepÃÃo do contribuinte em ser auditado, objetivou-se verificar o impacto incidente na arrecadaÃÃo no exercÃcio seguinte a realizaÃÃo de auditoria fiscal. Para tanto, foram selecionadas empresas cadastradas no segmento de comercio atacadista e varejista cearenses considerando como parÃmetro o ICMS anual resultante das atividades operacionais, com a amostra compreendendo 8.166 empresas no perÃodo 2005-2011. Modelos com dados em painel foram estimados e os resultados permitem inferir que à significante o impacto da atividade de auditoria sobre o montante do ICMS arrecadado pelas empresas, impacto este que parece se dissipar no tempo, o que reflete uma âperda de memÃriaâ das empresas fiscalizadas. Ademais, constatou-se que este grupo de empresas teve um incremento anual mÃdio de 4,37% a 6,10% na arrecadaÃÃo individual, no perÃodo subsequente à fiscalizaÃÃo.

En el presente trabajo de investigación, analizaremos cómo la prescripción actúa como un límite temporal frente a la facultad de fiscalización y determinación con la que cuenta la Administración Tributaria.<br>Trabajo de investigación

Sammanfattning Problem: Den första november år 2010 avskaffades den lagstadgade revisionsplikten för små aktiebolag i Sverige. Syftet med detta var möjligheten för ökad kostnadseffektivitet och valfrihet för bolagen. Lagförändringen mötte dock motstånd från bland annat Skatteverket som befarade en ökad arbetsbörda och sämre kvalitet på bolagens rapporter. Syfte: Syftet med undersökningen är att bidra till en djupare förståelse för konsekvenserna lagförändringen haft på små aktiebolag och Skatteverkets kontor i Örebro. Metod: Insamling av data har skett genom semi-strukturerade intervjuer med fem små aktiebolag i Örebro samt Skatteverket i Örebro. Aktiebolagen var verksamma både före och efter avskaffandet av revisionsplikten och valdes ut genom en alfabetisk ordnad lista över aktiebolag. Empirin har sedan analyserats genom nyckelorden kvalitet, kontroll, arbetsbörda och kostnadseffektivitet. Slutsats: Lagförändringen har ännu inte påverkat aktiebolagens kostnadseffektivitet eller arbete. Skatteverket har fått en viss ökad arbetsbörda men kvaliteten på redovisningen är den samma som innan. Undersökningen resulterar dock i vetskapen att de små aktiebolagen behåller revisorn tack vare rådgivarrollen och kunskapen denne besitter. Behovet av revision verkar alltså mer bero på vilka kunskapsluckor bolagen måste fylla med avseende på redovisning och rapportering än vad som är lagstadgat. Nyckelord: Revisionsplikt, små aktiebolag, Skatteverket<br>Abstract Background: The first of November 2010 the statutory auditing was abolished for small companies in Sweden. The reason for this was to give the companies the opportunity to reduce costs and increase their level of freedom of choice. This was met with resistance from the Swedish tax agency, who feared an increase of their workload and a decrease of the quality of the companies’ financial reporting. Purpose: The purpose of this essay is to find a deeper understanding of the consequences that the abolished statutory auditing brought to small companies and the tax office in the city of Örebro. Method: The empirical findings have been collected through semi structured interviews with five small companies and the tax office in Örebro. The companies were active before as well as after the abolishment of statutory auditing and were selected from an alphabetical list. The empirical findings were analysed through the terms quality, control, workload and cost efficiency. Conclusions: The abolishment of statutory auditing has not yet affected the small companies in terms of cost efficiency or workload. The Swedish tax agency has noticed some increase of their workload, but there has been no change in the quality of the companies’ financial reporting. The essay concludes that small companies keep an auditor due to the advisory role and the knowledge the auditor possesses. The need for the companies to consult an auditor seems to a greater extent depend on what knowledge about financial reporting the companies lacks rather than what is required by law. Keywords: Statutory auditing, small companies, Swedish tax agency

Revisionsplikten för de minsta aktiebolagen i Sverige avskaffades 2010, främst för att minska dessa bolags kostnadsbörda. Detta skapade olika reaktioner hos bolagens externa intressenter, både positiva och negativa. Det sågs som positivt för företagandet i Sverige, men det uttryckes också oro för risken att fel i bokföring och deklarationer skulle öka när en revisor inte längre behövde granska dem. Dessa fel kan resultera i felaktigt redovisad skatt och ett ökat skattefel. I skattefel inkluderas alla fel som har en påverkan på den redovisade skatten, och de kan vara både avsiktliga och oavsiktliga. Skattefel påverkar många runt omkring företaget, bland annat de intressenter som verkar på den sociopolitiska arenan, så kallade Stakekeepers. De har inte någon direkt relation till företagets affärsverksamhet, men de har en indirekt betydelse för företaget genom sitt inflytande över opinion och lagstiftning. Dessa intressenters agerande och ställningstagande är idag ett underbeforskat område inom intressentteorin, och det är viktigt med denna teoretiska kunskap för att skapa förståelse för vad som sker på den sociopolitiska arenan. Då dessa intressenter har inflytande över lagstiftning måste lagstiftarna ta hänsyn till deras åsikter i sina betänkande kring nya lagändringar. Under 2015 ska regeringen göra en utvärdering av revisionspliktens avskaffande 2010, för att eventuellt genomföra en ytterligare höjning av gränsvärdena för revisionsplikt, och därmed göra revision frivillig för fler aktiebolag. Studiens syfte är att beskriva och förklara hur intressenter på den sociopolitiska arenan uppfattar skattefelets utveckling, om och på vilket sätt de relaterar denna utveckling till avskaffandet av revisionsplikten, samt vad som motiverar och påverkar deras ställningstagande vad gäller en eventuell framtida gränshöjning. För att uppfylla detta syfte har studien genomförts med en kvalitativ undersökning i form av intervjuer med fyra olika intressenter från den sociopolitiska arenan. Analysen av den empiriska datan, med stöd i den teoretiska referensramen, resulterade i tre slutsatser. Den första handlar om att de olika uppfattningarna kring skattefelets utveckling hos intressenterna på den sociopolitiska arenan har grund i deras respektive yrkeskunskaper. Den andra handlar om att de drivs och påverkas av sina respektive företrädarskap, främst om de är statligt eller privat företrädande. Den sista slutsatsen handlar om att de faktorer som påverkar hur intressenterna förhåller sig till en eventuell framtida gränshöjning är deras företrädarskap, ansvarstagande samt tillit till större företags redovisning<br>Mandatory auditing for the smallest limited companies in Sweden was abolished in 2010, mainly to reduce the cost burden for these small companies. This created different reactions among the companies' external stakeholders, both positive and negative. It was seen as positive for business in Sweden, but there was also concerns expressed about the risk of errors in the accounts and the declarations, and that they would increase when an auditor is no longer obligated to review them. These errors can result in improperly recognized tax and increased tax error. Tax error includes all errors that have an impact on the reported tax, and they can be both intentional and unintentional. Tax error affects many parties around the company, including the stakeholders operating in the social political arena, so called Stakekeepers. They do not have any direct relation to the company's business, but they have an indirect impact on the company through its influence on public opinion and legislation. These stakeholders' reactions and standingpoints is today a relatively unexplored area within the stakeholder theory, and this theoretical knowledge is important in order to create an understanding of what is happening on the social political arena. As these stakeholders have influence on legislation, the legislators must take their opinions into account in its reports on new legislative changes. During 2015, the government will undertake an assessment of the abolition of the mandatory auditing in 2010, to possibly conduct a further increase in the limits for mandatory auditing, and thus make the audit optional for more companies. The study aims to describe and explain how stakeholders in the social political arena perceive the tax error development, whether and how they relate this trend to the abolition of the mandatory auditing, and further what motivates and influences their position regarding a possible future limit raise. To meet this objective, the study was performed with a qualitative study in the form of interviews with four different stakeholders from the social political arena. The analysis of the empirical data, with the support of the theoretical framework, resulted in three conclusions. The first is about the different perceptions regarding the tax development among stakeholders in the social political arena, due to their professional skills. The second is that they are driven and influenced by their representation, particularly if they are representing the public or the private sector. The last conclusion is about the factors that affect how the stakeholders relate to a possible future limit raise. These factors are their representation, responsibility and their trust in larger companies accounting.

<p>Då avskaffandet av den lagstiftade revisionsplikten för småföretag är under utredning, är vårt syfte med denna uppsats att se vad ett avskaffande kan innebära för några utvalda intressenter.</p><br><p>The cancelling of the statutory audit for the small business is under investigation. Our aim with this study is to see what the cancelling will mean for the stakeholders we choosed.</p>