Search results

The purpose of this paper is to develop a comprehensive theory as to why academic research in accounting is said not to help practice.

The authors (1) present a comprehensive literature review in the academic/practitioner gap arena, and (2) develop a theoretical background for it. Further, they identify (3) the different information needs of these groups using value group theory and (4) the inherent factors and personality traits that influence career choice. Next, they (5) evaluate the values of each subgroup. They then (6) theorize what types of accounting research would interest each. They argue that (7) individuals who enter the academy differ from those who enter practice, and (8) the socialization processes and the impact of the professional setting (practice or academe) on behaviors further the separation of academic research from practitioner needs.

This paper is theoretical. It suggests that bridging the gap will be difficult. The study is theoretical. The limitation is that it does not empirically test the relationships hypothesized. By providing a comprehensive model of factors underlying the gap, however, it can be a fruitful source of research ideas for years to come. The implications are that it will be difficult to bridge the gap between accounting practitioners and academics. Having a greater understanding of the causes of the gap, however, may be very useful in fostering thought as to how to overcome it.

Prior literature on the topic is largely atheoretical. This paper is the first to develop a broad theory of the gap.

This study examines how Certified Public Accountants (CPAs), as tax practitioners, interpret and apply the ethical tax standards established by the American Institute of Certified Public Accountants and the Internal Revenue Service (IRS), using a hypothetical situation. Although the authors attempt to determine if CPAs are more likely to apply the substantial authority standard given certain factors affecting both the CPAs and their tax clients, one-dimensional standard threshold applications leave us to interpret only whether these factors affect the CPAs’ decision to sign a tax return upholding an ambiguous position. The authors find that an aggressive CPA (self-reported) is more inclined to sign the return than an unaggressive CPA. The authors also find that favorable prior dealings with the IRS, and awareness that the IRS is not pursuing a contrary position to a certain tax position, both contribute significantly to the CPA’s willingness to sign the return. While an aggressive tax client also fosters willingness to sign, it appears that tax clients with a refund pending (as opposed to a payment pending) are more apt to trigger a signed return. Study results indicate that ambiguities in the tax code, in concert with mitigating CPA/client factors, may lead to significant discrepancies in interpretation and application.

This study documents that an outcome-favorable bias is greater when the quantity of information describing a balanced tax-decision context is substantially increased. Second, the study demonstrates that an outcome-favorable bias can be offset by the use of principles-based ethical standards. Specifically, we examine the effect of AICPA Code of Conduct Section 54 for integrity and Rule 102-6 for advocacy. Students volunteered to participate in this study examining the manner in which accounting novices initially process principles-based standards. Prior studies using student subjects in an audit setting have found that principles-based standards were effective only when students had high levels of moral reasoning (Herron & Gilbertson, 2004), and rules-based technical standards had no impact on student subjects when making financial adjustments (Pflugrath, Martinov-Bennie, & Chen, 2007). If professional standards increasingly rely on principles-based standards, then understanding the impact of such standards on future entrants into the profession would provide guidance in the creation and implementation of future standards, as well as assist educators in the development of accounting curricula. We extend the pattern of past research to a tax setting and show that tax-saving recommendations are a function of the presence of a professional standard and the level of contextual detail.

This study examines the effect of using a computerized decision aid on student cognitive effort and learning in the first tax course. Students at a mid-western university in the United States prepared a 1040 tax return using either paper or tax software from a given set of taxpayer information. Students using paper forms reported higher levels of cognitive effort than did students using the tax software, however, no association between self-efficacy and cognitive effort was found. A test for association between decision aid type and inferential (higher-level) learning (the third level of Bloom's taxonomy) found cognitive effort to be statistically significant. The study also found a significant interaction between cognitive effort and experience. These results suggest that paper forms, which require students to work through task processes, may be better instructional tools for helping students acquire a deeper understanding of subject matter. Although tax software provides potential benefits of increased accuracy and speed, practitioners should be aware of its limitations as a learning tool.

This research explores the expectation gap between tax clients’ motivations to hire tax preparers versus tax preparers’ perceptions of those client motivations. The study builds on limited previous research by examining preparers primarily from local firms rather than focusing solely on large international firms. The Gaps Model of Service Quality provides the theoretical lens for the paper. We employ the recently developed Taxpayer Motivation Scale (TMS) to measure four client motivations to hire a preparer: (1) saving money, (2) saving time, (3) legal compliance, and (4) protection from the IRS. We measure expectation gaps for those four motivations using matched tax preparer–tax client dyads.

We employ statistical sub-group analyses to investigate the effects of both clients’ and preparers’ demographic characteristics that influence tax-expectation gaps. Results suggest client gender plays a noteworthy role in predicting many of the gaps. In addition, complexity of tax returns, children in the home, and client perceptions of tax-preparer advocacy help explain gaps. Finally, female preparers appear to be relatively more sensitive to client needs. We conclude that tax preparers need to (1) better understand their clients’ motivations for hiring them and (2) reexamine marketing efforts to educate clients about preparer credentials and potential strategy options for tax preparation.

Tax compliance involves complying with the tax rules and regulation, which encompasses the filing, reporting and payment of tax. The two aspects of tax non-compliance are tax evasion and tax avoidance. While the ethicality of tax evasion as an illegal act of reducing tax is clear, the consensus regarding the morality of tax avoidance as a legal act of minimizing tax is mixed. This chapter will discuss the ethical perspective of tax (non)compliance.

We approach this topic by discussing the two important terms of tax non-compliance namely tax evasion and tax avoidance from the ethical point of view. The tax evasion and tax avoidance were critically evaluated to justify whether it is ethical or not. The tax non-compliance is also associated to the corporate governance which if do effectively help to protect the interest of larger stakeholder.

In a nutshell, tax non-compliance such as tax avoidance and tax evasion is unethical act and these acts of non-compliance go against the spirit of contemporary corporate governance which sought to protect the interest of the stakeholders.

Tax non-compliance could enhance shareholders wealth (in terms of reduced tax); it affects the distribution of wealth (public benefits financed by tax revenues) among the society at large as another stakeholder affected by such act. Future research may be conduct to investigate this to the larger sample.

Firms should avoid engaging in non-compliance activities such as engaging in tax evasion and aggressive tax avoidance as part of its social obligation to the society in line with the spirit espoused in the contemporary corporate governance.

This paper argues that tax non-compliance is unethical and highlights the importance of having efficient corporate governance for larger stakeholder’s interest.

This research develops a scale to measure taxpayers’ motivation to hire tax preparers. Prior research has examined this topic with simple checklists or open-ended questions. The importance of the taxpayer–preparer relationship suggests more research is needed, and a valid scale would increase the generalizability of findings. Initially 76 items were analyzed using exploratory factor analysis. The data indicate four separate constructs: legal compliance, time savings, money savings, protection from/avoidance of the IRS. After the initial analysis, 27 items remained, a second round of data was collected, and confirmatory factor analysis and coefficient alpha allowed further reduction to 14 items. The final constructs remain the same. This scale is a methodological contribution for use by tax researchers that will assist in increasing the generalizability of findings regarding taxpayers’ motivations to hire tax preparers.

This project requires students to analyze and make a client recommendation for the most tax-effective saving option, comparing a traditional individual retirement account (IRA) versus Roth IRA. Students analyze the two alternatives and track growth as well as projected tax liability over the life of the client to determine the strategy that generates the best outcome for the client. The project emphasizes principles of tax planning to illustrate that the solution with the smallest tax liability in the short term is not necessarily the most beneficial option over the long term, as well as how this often is in conflict with a client’s expectations and tax preparer tactics utilized to attract new clients. Students will demonstrate critical thinking skills through the analysis of two options for a client, and the communication of the findings with a recommendation through a client letter.