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Abstract:
This study investigates the effects of attitudes toward the perceived importance of corporate ethics and social responsibility and Machiavellianism on professional tax practitioners' willingness to advocate aggressive avoidance schemes on behalf of corporate clients. We hypothesise that practitioners who perceive corporate ethics and social responsibility as more important will judge aggressive avoidance less favourably, and accordingly will estimate a lower likelihood of acquiescence in such schemes. We also hypothesise that practitioners with stronger Machiavellian orientations will be less likely to feel that corporate ethics and social responsibility are important, and more likely to judge aggressive tax avoidance schemes favourably. The findings, based on a survey of tax professionals in Hong Kong, support the hypotheses.

Social Responsibility, Machiavellianism, Tax Avoidance, Hong Kong Tax Professionals, corporate ethics, avoidance schemes

Abstract:
The ongoing debate regarding the desirability of extending certain provisions of the Sarbanes-Oxley Act to auditors of nonpublic companies creates a need for a better understanding of the effectiveness of existing sanctioning mechanisms in the accounting profession. To provide input on this issue, the current paper reports the results of an exploratory study of perceived sanction threats among CPA/auditors employed by small public accounting firms. A survey of AICPA members in public practice was conducted to assess the perceived threat of sanctions for auditor acquiescence in a client earnings manipulation scheme. The results indicate that, prior to the passage of the Sarbanes-Oxley law, CPAs perceived a relatively high threat from many types of professional sanctions, and that most sanction threats appeared to act as a deterrent to fraud. However, the perceived likelihood of criminal conviction and CPA license revocation were relatively low. The findings also indicate that the materiality of the financial statement manipulation had a significant effect on all of the sanction threats examined, and the level of assurance on the financial statements affected perceptions of certain types of sanctions.

Auditor sanctions, Sarbanes-Oxley Act, nonpublic companies