The effect of auditing on tax corrections: Empirical evidence of Portuguese private companies

Abstract

The main goal of this research is to check how the audit of the individual financial accounts of unlisted national companies is associated with the level of Book-Tax Differences, calculated by the difference between the reported book value and the corresponding tax returns. The empirical study was based on 236,950 observations from 2010 to 2013. The accounting data were taken from the data base Bureau van Dijk's Amadeus. The results obtained allow us to conclude that the companies whose accounts are audited show greater differences between the accounting result and the tax result, particularly those that are audited by one of the four largest professional services networks in the world (EY, PwC, Deloitte and KPMG).