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The favorable results of fiscal/tax policies implemented in a country depend on the accuracy of the declarations and the full timely payment of taxes. Tax auditing is the administrative function that ensures the accuracy of the taxes to be paid. From a global perspective, tax auditing is very important in all countries. Each country wishes to bring its own tax audit structure to an optimal level. Along with the audit, the tax function of the taxpayers and the investigations carried out on the books and documents related to these transactions, as well as, the exploratory function aimed at finding out and correcting errors, frauds and deficiencies, and preventing the occurrence of errors and frauds are in question. Ensuring the effectiveness of tax auditing will result in effective tax administration. Any increase in total tax revenues whilst keeping the expenses made for taxation at a certain level will increase the efficiency of tax administration. The tax audit, which is mandatory for the realization of the intended purpose, will also contribute to the tax compliance of taxpayers. Voluntary compliance of taxpayers who think that they will be audited in certain periods will be strengthened. All this can be achieved through an effective audit system. The aim of this study is to provide an assessment of the tax audit, highlighting its need and the things to be done in order to ensure the effectiveness and the advantages of the tax audit.

This study examines companies that separated or integrated the tax and audit functions subsequent to the passage of the Sarbanes‐Oxley Act (SARBOX). While the provision of tax services is not currently prohibited by SARBOX, some companies have separated these two functions. An examination of the relationship between tax function separation (integration) and proxies for audit quality, tax advocacy and audit fee is performed for a matched sample of companies that made the decision to separate or integrate during the period following the passage of SARBOX. In addition, we survey CFOs of both types of companies to determine the motivations behind the separation/integration decision. Our results indicate separation firm CFOs perceive benefits associated with auditor independence as their main reason for separating, while integration firm CFOs perceive cost savings and knowledge spillover as benefits of integration. The matched‐pair analysis suggests that both cost‐savings and tax‐savings are present in the year the tax and audit function is integrated, a benefit not enjoyed by their separation firm peers.

This paper aims to argue that enterprise culture is producing negative effects. Companies and major accountancy firms are increasingly willing to increase their profits through indulgence in price fixing, tax avoidance/evasion, bribery, corruption, money laundering and practices that show scant regard for social norms and even laws.

The paper locates business behaviour within the broader dynamics of capitalism to argue that hunger for higher profits at almost any cost is not constrained by rules, laws and even periodic regulatory action.

The paper uses publicly available evidence to show that accountancy firms are engaged in anti‐social behaviour. Evidence is provided to show that in pursuit of higher profits firms have operated cartels, engaged in tax avoidance/evasion, bribery, corruption and money laundering.

The paper seeks to bring the anti‐social activities of accountancy firms under scrutiny and thus extend possibilities of research in social responsibility, ethics, accountability, claims of professionalism, social disorder and crime.

It is rare for accounting scholars to examine predatory practices of accounting firms. It shows that predatory practices affect a variety of arenas and stakeholders.

This study seeks to examine whether there are differences between companies that purchase either recurring or non‐recurring audit services and those that do not, and whether auditors discount their audit fees for either type of non‐audit service.

The study examines associations between audit and non‐audit fees in New Zealand, for the period 1995 to 2001. The advantage of this setting is that data on non‐audit services was disclosed in this period and that the period pre‐dates more recent controversies over whether non‐audit services are permissible.

Companies that purchase any type of non‐audit services from their auditors are larger and more complex than companies that purchase auditing only. Companies that obtain tax services from their auditors usually do so on a recurring basis. In contrast, consulting services do not tend to occur every year. Auditors do not discount their fees for either recurring or non‐recurring non‐audit services.

While useful data is available about the type of non‐audit services provided, there are limitations to the extent to which this information provides a precise measure of whether the services were recurring or not.

The research contributes to understanding the issues regarding auditors providing non‐audit services by providing evidence that neither recurring nor non‐recurring services are associated with a reduction in audit fees. This finding is relevant when considering whether regulation of non‐audit services should permit certain types of services, or should prohibit all non‐audit services.

The purpose of this paper is to examine the impact of audit assurance on tax enforcement, which is represented by whether firms have been visited by tax officials and, if so, the total number of inspections per fiscal year. The efficiency of tax administration is further examined by whether it becomes a binding constraint to a firm’s operations.

The sample consists of 18,746 firm-year observations from 28 transition and market-based economies in Central-Eastern Europe. The binary logit model, the Poisson model and the ordinal logit model are applied to test the hypotheses.

The empirical results show that, while audit assurance does not reduce the probability of being visited by tax officials (regardless of visit times) for the two country groups, firms with audited financial reports meet tax officials less often in market-based economies but not in transition economies. Furthermore, only in market-based economies does audit assurance reduce the probability that tax administration becomes a severe obstacle to firms’ operations.

This study addresses the relationship between tax administration and audit assurance in market-based and transition countries. One implication of the empirical findings is that audit assurance would add benefits to business environments when countries evolve from transition to market-based economies.

The purpose of this paper is to discuss the causes that justify the application of presumptions in corporate income taxation. The authors focus on motives showing a connection to errors or fraud in the recognition of operations by the financial accounting system. The research question can be framed as follows: How to define the frontier between reliable accounting records and unreliable information, the latter rendering presumptions as an admissible way of taxing income?

The research design of this paper rests on two analytical steps based on the legal research method. The first step enquires, at the accounting level, how to define and quantify errors that render accounting statements inappropriate to assess firms’ performance and compute taxable income. The second step explores the practical application of presumptive tax concepts by Portuguese courts, to offer some criteria that can function as guidelines to firms and tax auditors.

The judgment about the boundaries of accounting errors that allow the use of presumption-based taxation is often decided by litigation. Portuguese jurisprudence provides strong evidence that presumptions should only be applied if, even by correcting of errors and inaccuracies, corporate real income cannot be obtained. The level of contamination must be obvious, and tax audits must present a strong and documented claim that presumptions are a last-resort mechanism to compute an appropriate tax base. The Supreme Tax Court has been applying a consistent approach characterized by: presumptive taxation is a last-resort mechanism; tax audits must prove that a generalized contamination of accounting data is observed; it is not possible to correct accounting errors, given their extension and depth, and the taxpayer did not submit contradictory solid evidence.

Applying, in practice, legal criteria to decide that accounting manipulation is so extensive that taxation must be based on presumptions is fraught with subjectivism. However, we offer an analysis where some guidelines to this complex issue are presented in a logical way. Principles-based taxation can, nonetheless, be applied with a significant degree of fairness and consistency.

The paper contributes to the literature by offering an analysis of the criteria used by Portuguese tax courts when deciding that accounting data can be disregarded and presumptions used as a tax computation tool. Given that the rule, in many countries, is to base taxable income on accounting records (albeit with adjustments established in Corporate Income Tax Codes), presumptions are a notable exception to this well-established rule. As such, taxpayers have a significant interest in knowing how courts rule on tax authorities’ use of presumptions. In this light, the paper has also potential value to professionals in the accounting and tax fields. They are often confronted with tax audits that apply presumptions. Therefore, knowing jurisprudential trends in the judgment of such, usually complex, cases is an important issue.

This study investigates how a tax agency would assess the liability of a taxpayer who has first adopted a new, controversial tax‐saving scheme, which might be employed by other taxpayers. The tax agency’s post‐audit assessment to the first taxpayer influences whether and how the innovation will diffuse among taxpayers. We find that it is optimal for the tax agency to settle the issue regardless of whether and how fast the innovation diffuses. A trial is too costly an option for the agency: losing in court would make the innovation public knowledge, and other taxpayers would immediately adopt the new scheme. Neither the number of other taxpayers nor the speed of diffusion affects the amount of the optimal post‐audit assessment. These results suggest that a tax practitioner who markets a new tax‐saving scheme need not limit the speed of diffusion for fear of an aggressive response from the agency.