International Journal of Public Policy and Administration Research

The impact of corruption on auditor independence: The case of gifts and discounts

Neef Alwadani — 2024-04-09

This study investigates the correlation between auditors' acceptance of gifts and discounts (AGD) and the potential undermining of auditor independence, akin to bribery. Bribery usually encompasses the exchange of valuable items, such as money, gifts, or favors, in return for influence or favors. Both "gifts" and "discounts" have the potential to constitute bribery, depending on the circumstances. Therefore, in specific contexts, the giving or receiving of gifts and discounts might be viewed as bribery if their intention is to unduly influence someone's actions or decisions. This study comprises a final sample of 62 audit firms in Saudi Arabia. The simple regression results highlight a significant negative correlation between auditors' perceptions of accepting gifts and discounts, and their independence. The act of receiving gifts and benefits establishes a close tie between auditors and their clients, influencing auditors’ behavior. The study suggests that the higher the value of a gift or benefit, the more pronounced the threat to auditor independence. Furthermore, even minimal gift and discount arrangements have a significant impact on auditor independence. The insights gained from this study can be of substantial value to the accounting and auditing professions, audit firms, standards setters, and auditing regulators, fostering a deeper understanding of the degree to which gifts and discounts affect auditor independence.

Tax progressivity and its influence on tax collection levels in Mexico, 1992-2016

Odette Delfin-Ortega — 2024-05-06

This study aims to examine the impact of income tax and VAT progressivity on Mexico’s tax collection. In Mexico, tax collection has persistently remained at notably low levels, attributed in part to the perceived inequity within the tax system. Initially, we compute the progressivity of income tax and VAT to ascertain the average percentage increase in these taxes relative to a 100% rise in income. Results indicate income tax's progressive nature, contrasting with VAT's regressive pattern. Subsequently, employing a time-series model, we analyze the influence of income tax and VAT progressivity on tax collection. Our findings reveal a positive correlation between fiscal progressiveness and tax collection levels over both short and long terms. These findings offer practical implications, suggesting that leveraging the insights from this research could fortify tax policies, thereby enhancing tax revenues and contributing to improved income distribution. The analysis underscores the importance of considering the level of progressivity in income tax and VAT rates for enhancing tax collection in Mexico. By leveraging progressive taxation policies, policymakers can potentially boost tax revenues while promoting a more equitable distribution of income. Furthermore, an increase in tax collection can potentially support public programs and services benefiting society as a whole, thus enhancing overall welfare.

The role of external review in enhancing tax planning practices for investment agencies and companies in the sports sector and its impact on the Saudi economy

Ahmed K. Hassan — 2024-07-01

The current study aimed to investigate the influence of an external audit on the achievement of tax planning practices in investment authorities and sporting companies, and to analyze its impact on the Saudi economy. We employed a descriptive method, specifically the survey method, to establish the objectives of this report. The participants represented the tax departments of the General Authority of Zakat and Income in addition to the responsible parties in the sports ministry, the ministry of investment, the sports authorities’ managers and the private companies, the commercial law and economic law experts, experts in sports law and sports management, and the sports law and sports management experts. They serve as members of the board of directors for various Saudi sporting organizations. The research used 350 participants as the sample frame, collecting data through the use of questionnaires. A consensus has been reached on tax avoidance approaches such as structure decisions and deductible costs that have been influenced by factors like disparate taxes and administrative weakness. It also demonstrated the enhanced application of external audit principles, leading to improved effectiveness and efficiency in tax planning. The research that was conducted has noted the need for external auditing to enhance financial and tax management and economically strengthen Saudi Arabia. The economic effects of such practices can be studied in future studies by expanding on the employment, investment, and economic growth dimensions of qualifications in the sports industry in the Kingdom of Saudi Arabia and adding financial and economic views.