Accounting firms that prepare the taxes of companies they also audit tend to steer away from dubious tax deductions, according to a new study.
The study found that tax returns prepared by companies' external auditors claim roughly 30 percent less in questionable tax benefits than do those prepared by other outside accountants or by the firms' own tax officers. The study, written by Petro Lisowsky of the University of Illinois at Urbana-Champaign, Kenneth J. Klassen of the University of Waterloo and Devan Mescall of the University of Saskatchewan, appears in the January/February issue of the American Accounting Association journal The Accounting Review.
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