Whether building a road or fighting a war, leaders from ancient Mesopotamia to the present have relied on financial accounting to track their state's assets and guide its policies. Basic accounting tools such as auditing and double-entry bookkeeping form the basis of modern capitalism and the nation-state. Yet our appreciation for accounting and its formative role throughout history remains minimal at best--and we remain ignorant at our peril. The 2008 financial crisis is only the most recent example of how poor or risky practices can shake, and even bring down, entire societies. In The Reckoning, historian and MacArthur "Genius" Award-winner Jacob Soll presents a sweeping history of accounting, drawing on a wealth of examples from over a millennia of human history to reveal how accounting has shaped kingdoms, empires, and entire civilizations. The Medici family of 15th century Florence used the double-entry method to win the loyalty of their clients, but eventually began to misrepresent their accounts, ultimately contributing to the economic decline of the Florentine state itself. In the 17th and 18th centuries, European rulers shunned honest accounting, understanding that accurate bookkeeping would constrain their spending and throw their legitimacy into question. And in fact, when King Louis XVI's director of finances published the crown's accounts in 1781, his revelations provoked a public outcry that helped to fuel the French Revolution. When transparent accounting finally took hold in the 19th Century, the practice helped England establish a global empire. But both inept and willfully misused accounting persist, as the catastrophic Stock Market Crash of 1929 and the Great Recession of 2008 have made all too clear. A masterwork of economic and political history, and a radically new perspective on the recent past, The Reckoning compels us to see how accounting is an essential instrument of great institutions and nations--and one that, in our increasingly transparent and interconnected world, has never been more vital.

The Reckoning: Financial Accountability and the Rise and Fall of Nations

Purpose – The purpose of this paper is to stimulate debates about contemporary auditing practices.Design/methodology/approach – The paper builds a generalised theory of auditing to pose some questions about the basic auditing model, notions of audit quality and the possibility that some transactions cannot be audited in the traditional way.Findings – It is argued that the basic auditing model is flawed since it makes auditors financially dependent on companies. The conventional approach to “audit quality” is also incomplete as it pays little attention to the organisational and social context of auditing. It also argues that as companies have diversified into new forms of investment and complex financial instruments, some transactions may be not be capable of being audited in the traditional way.Research limitations/implications – The paper does not offer a comprehensive critique of contemporary auditing issues. Rather it is a focus on some selected issues.Practical implications – The paper encourages refl...

/pdf/the-audit-crunch-reforming-auditing-4wvp7apql6.pdf

The audit crunch: reforming auditing

We view audit‐quality choice as one among many that managers make to maximize firm value. We question whether audit‐quality differences among publicly traded companies are of significant interest to investors, clients, and auditors and ask for research on this topic. Relatedly, we ask for research on whether auditors and their clients show behavior consistent with regulated audit quality exceeding the audit quality level demanded absent regulation. We propose that researchers incorporate the competitive advantages of auditors and the institutional features of the audit process into the definition of audit quality. We propose that audit quality research test for externalities and inefficiencies to understand whether auditors and their clients are choosing the efficient level of audit quality. We note the legislative, judicial, and executive powers residing in the PCAOB.

Issues Raised by Studying DeFond and Zhang - What Should Audit Researchers Do?

“Internal controls” refer to organizational rules and procedures used to safeguard assets and to detect fraud, waste, and abuse. This study examines the relationship between internal control deficiencies and municipal bond borrowing costs. The most severe form of internal control deficiencies (i.e., material weaknesses) is associated with higher borrowing costs for municipal bonds, between 10 and 18 basis points. Credit ratings mediate some of the effect of material weaknesses in internal controls but the indirect effect is relatively small. The effect of internal control deficiencies on borrowing costs was consistent in the time period before and after the financial crisis.

https://papers.ssrn.com/sol3/Delivery.cfm/PBAF_PBAF12120.pdf?abstractid=2929397&mirid=1

Internal Control Deficiencies and Municipal Borrowing Costs

Accounting frauds and scams are perennial. They occurred in all eras and in all countries, and affected many organizations, regardless of their size, location, or industry. From Enron and WorldCom in 2001 to Madoff and Satyam in 2009, accounting frauds and scams have been dominating news items in the past decade. Corporations and regulatory bodies are trying their best to analyze and correct existing defects in their reporting system. After having an overview of the fraud scenario in India, it is apparent that criminals have become technology-savvy, and invented newer schemes to perpetuate crimes. In the current reporting environment of "digital-age," forensic accountants (FA’s) are in great demand for their "niche" accounting, auditing, legal and investigative skills. Hence, "forensic" accounting has been thrown in the "forefront of the crusade" against financial deception and accounting scandals.The present study investigates through a questionnaire, which was conducted in three leading States of the national capital region (NCR) of India during 2011-12, "if there are differences in the views of the relevant skills of FA’s among accounting practitioners, academics, and users of forensic accounting services." From the statistical test of the hypotheses propounded for this study, we discovered that "core skills are not enough requirements for FA’s, there are significant differences in the relevant skills of FA’s, as given by previous researchers with the current research, and the necessary skills of FA’s, as identified by both academics and professionals, will hopefully meet employers’ expectations too." Therefore, FA’s, being professional experts having "sixth" sense and possessing "special" skills are urgently required to counter all the ingenuity of these criminals. At present, some Universities in India are considering adding forensic accounting course to their curriculum. The results of this study may provide some guidance to educators for the development of forensic accounting curriculum by identifying the pertinent skills to accompany such a program of study.

An Emperical Investigation of the Relevant Skills of Forensic Accountants: Experience of a Developing Economy

The Board is issuing this concept release to seek public comment on potential changes to the auditor's reporting model. As a result of the performance of required audit procedures, auditors often have significant information regarding how a company's financial statements were prepared that might be useful to investors and other financial statement users. Discussion in the auditor's report of this information also could lead to more efficient markets and improved allocations of capital. The objective of this concept release is to discuss several alternatives for changing the auditor's reporting model that could increase the transparency and relevance of the financial statements and the audit process.

Public Company Accounting Oversight Board

Um eine erbschaftsteuerbedingte Betriebsaufgabe zu verhindern und den Erhalt von Arbeitsplatzen zu fordern, haben das Erbschaftsteuerreformgesetz 2008 und das Wachstumsbeschleunigungsgesetz 2009 die Verschonungsregeln fur die Vererbung von Betriebsvermogen grundsatzlich uberarbeitet. Dem Steuerpflichtigen stehen die Regelbesteuerung (Steuerfreistellung von 85% des Betriebsvermogens; eventuelle Nachversteuerung nach funf Jahren) sowie das Optionsmodell (vollstandige Freistellung; eventuelle Nachversteuerung nach sieben Jahren) zur Wahl. Das Ziel des vorliegenden Beitrags besteht darin, Vorteilhaftigkeitsbedingungen fur die Regelbesteuerung beziehungsweise das Optionsmodell zu identifizieren. Dazu wird zunachst ein liquiditatsorientierter, auf Erwartungswerten basierender Vergleich der beiden Alternativen vorgenommen. Anschliesend wird die Unsicherheit der zukunftigen Lohnentwicklung explizit in die Analyse einbezogen. Die Modellergebnisse implizieren fur viele Fallkonstellationen, dass sich Steuerpflichtige trotz der strengeren Anforderungen fur das Optionsmodell entscheiden sollten, um eine niedrigere erwartete Steuerzahlung zu erreichen. Dies gilt selbst in Fallen, in denen die Entwicklung der Lohnsumme im Erwartungswert negativ ist.

Erbschaftsteuerliche Verschonungsregeln Für das Betriebsvermögen — Ein Theoretischer Ansatz zur Steuerplanung

Erbschaftsteuerliche Verschonungsregeln für dasBetriebsvermögen – ein theoretischer Ansatz zurSteuerplanung

Nachfolgeplanung in Familienunternehmen : eine Analyse auf Basis des Erbschaftsteuerreformgesetzes und des Europarechts

Mors ultima linea rerum est. Ob mit dem Tod des Unternehmers das Ende seines Unternehmens einhergeht, hangt masgeblich von der erbschaftsteuerlichen Belastung ab. Mit seinem Urteil vom 17.12.2014 hatte das Bundesverfassungsgericht (BVerfG) die Bestimmungen uber die Befreiung von der Erbschaft- und Schenkungsteuer (ErbStG) fur Betriebsvermogen, Betriebe der Land- und Forstwirtschaft und Anteile an Kapitalgesellschaften in §§ 13a und 13b ErbStG in Verbindung mit der Tarifvorschrift des § 19 Abs. 1 ErbStG in ihrer im Jahre 2009 masgeblichen Fassung fur mit dem Grundgesetz (GG) unvereinbar erklart.

Gesetz zur Anpassung des Erbschaftsteuer- und Schenkungsteuergesetzes an die Rechtsprechung des Bundesverfassungsgerichts – Eine Analyse vor dem Hintergrund des Gleichheitsgrundsatzes und der Unternehmensfortführung

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