What is it about?
This study investigates the effect of KPMG’s Deferred Prosecution Agreement (DPA) on the accounting firm’s ability to sell auditor-provided tax services (APTS) and its clients’ tax avoidance.
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Why is it important?
Broadly, our findings highlight how elevated reporting standards and external monitoring impose significant negative economic consequences on the service providers subject to these sanctions. At the same time, it appears clients do not suffer any observable tax costs by continuing to engage a sanctioned tax service provider.
Perspectives
Investigations into KPMG's marketing of tax shelters between 1996-2002 nearly destroyed the accounting firm, but little research had been done into the consequences of the DPA it ultimately agreed to. Beyond documenting the economic impact to the firm itself, we find some interesting and somewhat surprising results among how its clients responded.
Andrew Finley
Claremont McKenna College
Read the Original
This page is a summary of: The Economic Consequences of Tax Service Provider Sanctions: Evidence from KPMG's Deferred Prosecution Agreement, Journal of the American Taxation Association, April 2016, American Accounting Association,
DOI: 10.2308/atax-51272.
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