Details
| Original language | English |
|---|---|
| Pages (from-to) | 545-568 |
| Number of pages | 24 |
| Journal | European accounting review |
| Volume | 33 |
| Issue number | 2 |
| Early online date | 29 Aug 2022 |
| Publication status | Published - 2024 |
Abstract
We examine whether tax audits become more efficient if tax auditors have access to information about statutory audit adjustments. To this end, we extend the standard tax compliance game by including a statutory auditor and analyze the strategic interactions among a firm issuing financial and tax reports, a statutory auditor, and a tax auditor. We show that granting the tax auditor access to information on statutory audit adjustments can, in some cases, increase tax revenues while simultaneously decreasing tax audit frequency. Thus, more information sharing between statutory and tax auditors could be a policy instrument to combat tax evasion and increase tax audit efficiency. However, the tax audit efficiency enhancing effect comes at the cost of a reduction in financial statement quality as the probability of overstated financial assets increases. Moreover, depending on the importance of firms' financial statement valuation, the additional information may also reduce tax revenues. The regulator must, therefore, carefully weigh the potential efficiency gains from information sharing on statutory audit adjustments that are derived in this study against the potential efficiency losses.
Keywords
- Statutory audit, Strategic auditing, Tax audit, Tax audit efficiency, Tax compliance game
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Business and International Management
- Business, Management and Accounting(all)
- Accounting
- Business, Management and Accounting(all)
- Business, Management and Accounting (miscellaneous)
- Arts and Humanities(all)
- History
- Engineering(all)
- Engineering (miscellaneous)
- Economics, Econometrics and Finance(all)
- Finance
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
- Economics, Econometrics and Finance(all)
- Economics, Econometrics and Finance (miscellaneous)
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In: European accounting review, Vol. 33, No. 2, 2024, p. 545-568.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Information Sharing between Tax and Statutory Auditors
T2 - Implications for Tax Audit Efficiency
AU - Blaufus, Kay
AU - Schöndube, Jens Robert
AU - Wielenberg, Stefan
PY - 2024
Y1 - 2024
N2 - We examine whether tax audits become more efficient if tax auditors have access to information about statutory audit adjustments. To this end, we extend the standard tax compliance game by including a statutory auditor and analyze the strategic interactions among a firm issuing financial and tax reports, a statutory auditor, and a tax auditor. We show that granting the tax auditor access to information on statutory audit adjustments can, in some cases, increase tax revenues while simultaneously decreasing tax audit frequency. Thus, more information sharing between statutory and tax auditors could be a policy instrument to combat tax evasion and increase tax audit efficiency. However, the tax audit efficiency enhancing effect comes at the cost of a reduction in financial statement quality as the probability of overstated financial assets increases. Moreover, depending on the importance of firms' financial statement valuation, the additional information may also reduce tax revenues. The regulator must, therefore, carefully weigh the potential efficiency gains from information sharing on statutory audit adjustments that are derived in this study against the potential efficiency losses.
AB - We examine whether tax audits become more efficient if tax auditors have access to information about statutory audit adjustments. To this end, we extend the standard tax compliance game by including a statutory auditor and analyze the strategic interactions among a firm issuing financial and tax reports, a statutory auditor, and a tax auditor. We show that granting the tax auditor access to information on statutory audit adjustments can, in some cases, increase tax revenues while simultaneously decreasing tax audit frequency. Thus, more information sharing between statutory and tax auditors could be a policy instrument to combat tax evasion and increase tax audit efficiency. However, the tax audit efficiency enhancing effect comes at the cost of a reduction in financial statement quality as the probability of overstated financial assets increases. Moreover, depending on the importance of firms' financial statement valuation, the additional information may also reduce tax revenues. The regulator must, therefore, carefully weigh the potential efficiency gains from information sharing on statutory audit adjustments that are derived in this study against the potential efficiency losses.
KW - Statutory audit
KW - Strategic auditing
KW - Tax audit
KW - Tax audit efficiency
KW - Tax compliance game
UR - http://www.scopus.com/inward/record.url?scp=85136858161&partnerID=8YFLogxK
U2 - 10.1080/09638180.2022.2108094
DO - 10.1080/09638180.2022.2108094
M3 - Article
AN - SCOPUS:85136858161
VL - 33
SP - 545
EP - 568
JO - European accounting review
JF - European accounting review
SN - 0963-8180
IS - 2
ER -