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Effects of Advice on Effectiveness and Efficiency of Tax Planning Tasks

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  • Odette M. Pinto

Abstract

Supervisory advice is generally given to tax professionals in public accounting firms before they commence tax planning tasks. The objectives of giving advice are to achieve effectiveness and efficiency in tax planning, as well as for training tax professionals. An experiment with 54 tax professionals, from accounting firms across Canada, was conducted to determine the effects of supervisory advice on effectiveness and efficiency in performing tax planning tasks of different complexity. Advice results in lower effectiveness in lower‐complexity tasks, as evidenced by more technically inadequate tax plans, signs of confusion and overdetermined solutions (i.e., unnecessary information in the tax plans). In higher‐complexity cases, the results suggest a limited improvement in effectiveness, as evidenced by more technically adequate plans, but at a cost of limiting insightful judgment. On the other hand, advice results in limited gains in efficiency for both the lower and higher‐complexity tasks. This study extends the advice and tax literatures by investigating the role of advice in the performance of tax planning tasks of different complexity, which has not been examined in other research. This study also contributes to tax practice, as public accounting firms should consider the limited gains in efficiency with the decrease in effectiveness for lower‐complexity tasks and the potential to limit insightful judgment for higher complexity tasks. The results of this study suggest that firms face trade‐offs in achieving efficiency, effectiveness and the training objective. Des conseils de supervision sont généralement prodigués aux fiscalistes des cabinets d'expertise comptable avant qu'ils ne s'attaquent à leurs tâches de planification fiscale. Ces conseils ont pour but d'assurer l'efficacité et l'efficience de la planification fiscale ainsi que de former les fiscalistes. L'auteure réalise une expérience à laquelle participent 54 fiscalistes de cabinets comptables de tout le territoire canadien afin de déterminer les répercussions des conseils de supervision sur l'efficacité et l'efficience avec lesquelles sont exécutées des tâches de planification fiscale présentant des degrés différents de complexité. Les conseils sont associés à une moins grande efficacité dans les tâches de complexité plus faible, ainsi qu'en témoignent des plans fiscaux moins adéquats sur le plan technique, des indices de confusion et des solutions surdéterminées (c'est‐à‐dire des plans fiscaux contenant de l'information inutile). Dans les tâches de complexité plus grande, les résultats obtenus semblent indiquer une modeste amélioration de l'efficacité, ainsi qu'en témoignent des plans plus adéquats sur le plan technique, mais au prix d'une entrave à la perspicacité du jugement. En revanche, les conseils sont associés à de modestes gains d'efficience tant dans le cas des tâches de complexité plus faible que dans celui des tâches de complexité plus grande. L’étude enrichit la documentation relative aux services de consultation et à la fiscalité grâce à l'analyse du rôle des conseils dans l'exécution de tâches de planification fiscale dont la complexité varie, un sujet sur lequel les chercheurs ne se sont pas penchés jusqu'ici. L’étude concourt également à l'exercice de la fiscalité, puisqu'elle sensibilise les cabinets d'expertise comptable aux gains d'efficience modestes et à la diminution de l'efficacité associés aux conseils dans les tâches de complexité plus faible et au risque d'entrave à la perspicacité du jugement dans les tâches de complexité plus grande. Les résultats de l’étude laissent croire que les cabinets sont appelés à trouver des solutions de compromis en matière d'efficience, d'efficacité et d'objectifs de formation.

Suggested Citation

  • Odette M. Pinto, 2015. "Effects of Advice on Effectiveness and Efficiency of Tax Planning Tasks," Accounting Perspectives, John Wiley & Sons, vol. 14(4), pages 307-329, December.
    • Handle: RePEc:wly:accper:v:14:y:2015:i:4:p:307-329
    DOI: 10.1111/1911-3838.12085
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