Tax compliance in an EFD-enabled environment: Evidence from a developing economy

The focus of this study was to assess the contribution of Electronic Fiscal Devices (EFDs) to ensuring tax compliance among small business owners in the Arusha Region in Tanzania. The study was motivated by the fact that the government of Tanzania has invested effort and funds to ensure that revenue adequately supports development projects. Regardless of effort, there is continued reliance on external sources of funds to support development projects. This poses a question on how the introduction of EFDs would increase tax compliance and eventually impact the government income for development projects. The main objective of the study was to determine whether the rate of using EFDs, the level of transparency, fairness in tax procedures, and the perceived audit effectiveness affect the level of tax compliance. Data was analyzed using descriptive procedures, One Way ANOVA, Chi-Square, and ordinal regression. Findings of the study are as follows: First, fairness in tax procedures, the perceived level of transparency and the rate of EFD use had no impact on the level of tax compliance; second, business and EFD use experience, audit effectiveness, and the use of EFDs in tax audits have impacted tax compliance. The study recommends other government departments to consider adopting relevant technology in operational areas where transparency, fairness and compliance are required. The inclusion of other sectors not currently captured by EFD use will be a step in the right direction.

Efektivitas Pemeriksaan Pajak: Sebuah Tinjauan Literatur

For developing countries, taxation is a challenging topic and has attracted the attention of researchers. Although taxes have a large contribution as a source of state revenue, in its implementation there are problems in the form of tax realization that does not reach the target. To combat this bad phenomenon, various countries in the world have incorporated tax audits into their tax systems. With the important role of tax audit activities, this paper aims to analyze how tax audits are effective, especially in the context of developing countries. This research is a literature study. Data were collected from various secondary sources and analyzed through qualitative data analysis techniques. The results show that tax audit effectiveness is a construct that can only be valid when its three components (audit probability, detection probability, and sanctions) work together. Tax audit effectiveness is a holistic construction that is a combination of various parts working together in a system to ensure prevention

The Sounds of Silence: A Framework, Theory, and Empirical Evidence of Audit Team Voice

Lower-level auditors are likely to encounter client information that may reflect important audit issues. The audit team cannot address these issues unless they are communicated upward. However, research indicates that lower-level auditors sometimes withhold issues, threatening audit effectiveness. We use a multi-method grounded theory approach to expand our understanding of the factors associated with auditors’ decision to speak up about potential audit issues. We use an experiential questionnaire to draw out participants’ real-life experiences with the decision to speak up or remain silent in the field (i.e., the “voice” decision). We summarize this work in a framework of audit voice determinants and a theoretical model of audit voice. We then use the determinants framework and the developed theory to conduct an experiment as an exemplar for how our work can be useful in generating future research.

Do key audit matters (KAMs) matter? Auditors’ perceptions of KAMs and audit quality in Finland

Purpose Key audit matters (KAMs) in International Standard for Auditing, 701 seek to enhance the value of the auditor’s report by increasing the transparency of how the audit was performed. The purpose of this study is to investigate how professional auditors themselves perceive the impact of KAMs on audit quality and audit effectiveness. Design/methodology/approach Statistical analyses of an electronic survey of certified public auditors (CPAs) in Finland. Findings Regarding the perceptions of KAMs, the authors found two dominant views on auditing: quality and efficiency. In general, the respondents did not consider that KAMs improve audit quality. However, auditors focusing on efficiency considered that KAMs make the audit process more fluent. Further, the use of KAMs may facilitate audit effectiveness and cooperation between auditors and managers. The authors also found three factors related to the KAMs processes and auditing work: effectiveness, risks and workload. Practical implications Auditors may use KAMs to provide focus in their work. This facilitates balancing between the demands for added value while keeping the workload and audit risks at a tolerable level. Originality/value This study contributes to the emerging literature on KAMs as well as to the literature examining practitioner views of changes in auditing regulation. It is, as far as we know, the first study to report survey evidence on how CPAs themselves perceive KAMs and the effects of KAMs on audit work in an European Union country context.

Internal Audit Effectiveness and Audit Committee Characteristics: Empirical Evidence from Pakistan

Internal audit function (IAF) is a critical component of corporate governance mechanisms, and researchers have argued that internal audit effectiveness (IAE) is of utmost importance to serve the purpose. The study attempts to contribute to a better understanding on the role of audit committee (AC) characteristics (i.e. AC size, AC meeting frequency, AC expertise and AC independence) as a driver of IAE in public limited companies listed in Pakistan stock exchange (PSX). Two sets of questionnaires were distributed in 400 listed companies, whereas 162 completed sets in all respects with a response rate of 41% were received back. The collected data was analyzed using PLS-SEM. The results of the study indicated a positive influence of AC size and AC meeting frequency on the IAE of the listed companies. At the same time, the responses failed to establish any significant relationship between AC independence and AC expertise on the IAE.

Determinants Affecting Internal Audit Effectiveness

This study tries to identify the determinants that affect the effectiveness of internal auditing for listed firms in India. A sample of 300 listed companies was drawn. Questionnaires were mailed to the head of audit department, internal audit managers, internal auditor and head of accounts of each company. The overall response rate was 28.3%. The results were derived by applying multiple regression method and the three determinants turned out to be significant. The three determinants are risk-based planning, usage of Big Data and Analytics, and frequency of meetings of internal auditor (IA) with audit committee (AC) respectively. The model explains 42.8% of variations in the dependent variable (IA effectiveness). The study indeed encourages internal auditors to develop their core skills and competencies in the area of risk assessment and Big Data and Analytics for delivering better services to the auditees, the board of directors and the AC members. The implications of these findings may be of importance to internal audit professionals, accounting professional bodies and the regulators. Direction for future research is also provided.