Question Tag: Compliance

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  • 20 Marks

MOFS – APRIL 2023 – L4 – Q1 – Steps of the Selling Process in Financial Services

As Head of Business Development, write a report explaining the steps of the selling process in financial services marketing, focusing on how personal selling generates new business.

Personal selling is a key promotional and distribution tool in in financial services marketing. A lot of new business can be gained through person selling which adopt the six selling processes. As the Head of Business Development of your Bank, your Executive Director, Client Services has asked you to write a report to explain briefly the steps of the selling process.

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  • 20 Marks

EOB – APR 2023 – L1 – Q1 – Risks in Cheque Operations for Paying Bank

Discuss five risks faced by a paying bank in cheque operations.

With reference to cheque operations, state and discuss any five risks faced by a paying bank.

(20 marks)

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  • 20 Marks

TAI – Aug 2020 – L1 – Q2 – Taxpayer File Review

Explain six key reasons for reviewing a taxpayer’s file before a field audit.

(A) The tax auditor’s initial objective in pre-contact analysis is to collect relevant background materials and information to build a general picture of the taxpayer and its operations. Preparing for and obtaining the essential information about the taxpayer ensure that the audit is conducted efficiently and effectively.

Required: Enumerate and discuss six (6) key reasons why taxpayer’s file is reviewed prior to the field audit?

(B) Information from prior audit report and file may assist the auditor in his or her current exercise.

Required: Clearly outline and discuss any four (4) reasons why it is important to review the previous audit report or contact the previous tax auditor when preparing to undertake a current audit assignment.

(C) In the course of a tax audit, certain critical information on the audit should be communicated to the audit supervisor or manager as soon as the tax auditor took notice of them.

Required: Mention six (6) of such information that may require such action.

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  • 20 Marks

ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

You are a Chartered Tax Practitioner and you have been consulted to produce an article for publication in The Tax Collector, the monthly journal of the Ghana Revenue Authority on the topic “The Pooling System of granting allowance as provided in the Income Tax Act, 2015 (Act 896).

Required:

a. Explain the general features of the pool system. (10 Marks)

b. What are conditions expected to be satisfied before the grant of Capital Allowances? (8 Marks)

 

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  • 20 Marks

ATP – Feb 2017 – L3 – Q2 – VAT Returns

Explain what VAT Returns are for a newly registered company.

The Managing Director of EDVALLEY (Ghana) Limited, a newly registered company, has approached you to assist their company to comply with the Value Added Tax law in Ghana. They have asked you specifically to assist in the area of VAT Return and payment of the related tax.

Required:

a) Explain what VAT Returns are (4 Marks)

b) Advise the Managing Director company with respect to registration, submission of returns and the payment of the tax. (10 Marks)

c) A person with turnover below the registrable level could apply voluntarily to the Commissioner-General to be registered as a taxable person.

Required:

Outline the circumstances under which the Commissioner–General could refuse the request to register a taxable person. (6 Marks)

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  • 14 Marks

CR – Nov 2024 – L3 – Q5b – Financial Performance & Digital Technology Integration

Evaluating the financial performance of Nsawkaw PLC and addressing challenges of digital technology integration in accounting.

(a) Compute the following ratios for the years ended 2024 & 2023:
i) Operating profit margin
ii) Return on parent’s equity
iii) Earnings per share
iv) Current ratio
v) Trade receivables days
vi) Total liabilities to total assets %

(b) Write a report to the directors of DPEF evaluating the inter-period financial performance and position of NK using the above six (6) ratios. The report should draw attention to how the non-financial metrics combine with the financial counterparts to showcase the prospects and viability of NK.                                                                      c) The concept of double materiality is relevant to sustainability impacts and dependencies. It
incorporates financial materiality and impact materiality. 

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  • 5 Marks

AT – Nov 2024 – L3 – Q2c – Extension of Time and Early Filing of Tax Returns

Explain the conditions for tax return extension and early filing requirements.

Akosua Sokode has set up a small business to sell cosmetics in Accra. She just called you, an associate member of the Institute of Chartered Accountants Ghana, to seek your advice on tax returns and payment of taxes. Akosua Sokode told you that she cannot meet her tax payment deadlines and cannot file tax returns by the due dates. She also confided in you that maintenance of documents is a big problem for her.

Required:

Address the concerns of Akosua Sokode by briefing her on the following:

i) THREE factors regarding the extension of time for filing tax returns.

ii) TWO circumstances under which the Commissioner-General may request for filing of tax returns before the due date.

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  • 5 Marks

AT – Nov 2024 – L3 – Q1b – Challenges in Tax Reforms in Ghana

Analyze two key challenges in tax reforms in Ghana.

Countries, including Ghana, have embarked on various tax reforms geared towards improving tax revenue to help provide infrastructure and guarantee sustainable growth. Tax administration in Ghana has therefore seen a number of reforms over the years, including restoring the tax base, improving tax administration, and the integration of the Revenue Agencies into an Authority to act as a one-stop shop as per the Ghana Revenue Authority Act, 2009 (Act 791).

Required:
In reference to the statement above, analyze TWO challenges (key issues) on tax reforms in Ghana.

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  • 10 Marks

AAA – Nov 2024 – L3 – Q5b – Anti-Money Laundering Regulations and Auditor Responsibilities

Discuss anti-money laundering regulations in Ghana and auditors' responsibilities in compliance.

Lamsey Jewelers is a family-owned business specializing in high-end jewellery, located in Dunkwa-On-Offin in the Central Region of Ghana. The company sources gold from various suppliers in the small-scale mining sector. Recently, the Minerals Commission received anonymous tips suggesting that Lamsey Jewelers may be involved in laundering money through its operations. Authorities suspect that the business could be used to conceal the origins of illicit funds through gold purchases and sales.

To investigate these suspicions, regulatory authorities have appointed Baba Yara and Associates, an independent auditing firm, to conduct a thorough review of Lamsey Jewelers’ operations and financial transactions. During the audit, Baba Yara and Associates discovered that Lamsey Jewelers has been accepting large cash payments for custom jewellery orders without conducting proper due diligence on the customers. Several transactions involving cash payments exceed typical retail amounts, raising suspicions of potential money laundering.

Required:

i) Discuss the key legal and regulatory requirements in Ghana related to anti-money laundering relevant to Lamsey Jewelers.

ii) Discuss the obligations placed on professional firms such as Baba Yara and Associates in relation to money laundering.

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  • 10 Marks

AAA – Nov 2024 – L3 – Q5a – Roles of an Audit Committee in Corporate Governance

Explain four roles of an audit committee in compliance with good corporate governance practices.

An Audit Committee is a sub-group of a company’s Board of Directors responsible for the oversight of the financial reporting and disclosure process. The duties and responsibilities of the Audit Committee greatly contribute to good corporate governance practices of a company.

Required:
Explain FOUR roles of an Audit Committee in compliance with good corporate governance practices.

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  • 1 Marks

AAA – Nov 2012 – L3 – SA – Q2 – Assurance Engagements

Identifying non-objectives in profit forecast investigations by auditors.

Which of the following is NOT an objective of profit forecast investigation on which an opinion can be given?
A. Whether or not the profit forecast complies with the Generally Accepted Accounting Principles
B. As to whether the profit forecast has been prepared on the basis of the existing organization’s accounting policies
C. Whether or not the profit forecast has been prepared on the basis of management assumptions and judgment
D. On the reasonableness of the management assumptions and judgment of the profit forecast
E. As to whether the profit forecast agrees with the underlying records

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  • 15 Marks

ATAX – Nov 2021 – L3 – Q5 – International Taxation

Discusses the conditions for significant economic presence and the tax implications for TWITTY Incorporation.

The rapid growth in information and communication technology in Nigeria has brought with it boundless opportunities and changes in the way business activities are conducted. A significant number of transactions in Nigeria, in recent times, are consummated using mobile devices and online payments. In the same vein, the online platforms (mostly operated by international private entities) are perceived by various governments in developing countries (Nigeria inclusive) as undermining the economic interests of their host countries through non-payment of taxes, despite their significant economic presence.

In light of the above, the Finance Act 2019 provides for the treatment of digital and other service providers concerning the significant economic presence of a foreign entity. This provision was followed up with the issuance of Companies Income Tax (Significant Economic Presence) Order 2020 by the Federal Government of Nigeria.

You have been contacted by a foreign online outfit with interest in mobile networking and consultancy, TWITTY Incorporation, California, USA, through its official partner in Nigeria, MAAbioro Partners, to explain issues on the significant economic presence of a foreign entity, deemed to be operating in Nigeria.

Required:

As a tax consultant to TWITTY Incorporation, draft a report explaining the following areas:

a. The objectives of the relevant provisions of Finance Act 2019 and Companies Income Tax (Significant Economic Presence) Order 2020 concerning the significant economic presence of a foreign entity. (3 Marks)
b. Conditions for the determination of significant economic presence for digital activities. (5 Marks)
c. Determination of significant economic presence for technical and consultancy services. (2 Marks)
d. Activities exempted from significant economic presence in Nigeria. (3 Marks)
e. The tax implications of the Order 2020 on the activities of TWITTY Incorporation. (2 Marks)

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  • 30 Marks

AAA – Nov 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

You are a manager in Obuns & Co, a firm of Chartered Accountants, responsible for the audit of Akudre Plc, a listed entity, for the year ended 31 May 2020. The company operates in the textile industry and manufactures a range of goods, including clothing, linen, and soft furnishings. Akudre Plc employs approximately 750 sales staff across the country who sell the company’s products to both households and small to medium-sized businesses. Around 75% of Akudre Plc’s sales transactions are cash-based, and each sales staff member prepares a monthly cash sales report.

According to Akudre Plc’s CEO, Adu Oke, each staff member (including senior management) is encouraged to make cash sales on a commission basis to friends and family. Mr. Oke recently sold products worth N4,000,000 to business associates, depositing these funds into an offshore bank account under his sole control.

Review of Audit Working Papers:
A review of the audit working papers and an initial meeting with Mr. Oke revealed these issues:

  • Obuns & Co performed tax computations for Akudre Plc and completed tax returns for the company and Mr. Oke, invoiced as part of the total fee for audit and professional services. Mr. Oke’s personal tax return reflects numerous property transactions across international locations, which are detailed in off-shore accounts.

Financing Issue:
The audit committee has requested the audit engagement partner attend a post-audit meeting with the company’s bank officials, including the CFO and a representative from the audit committee, to renegotiate Akudre Plc’s lending facility. The audit partner is expected to confirm the company’s financial stability and verify that going concern procedures, including cash flow forecasts, were audited.

Required:
a. Discuss the policies and procedures which Obuns & Co. should have in place in relation to an anti-money laundering programme. (5 Marks)
b. Evaluate whether there are any indicators of money laundering activities by Akudre Plc or its staff. (4 Marks)
c. Describe the requirements of ISA 250: Consideration of Laws and Regulations in an Audit of Financial Statements. (5 Marks)
d. Discuss the actions required when an auditor identifies or suspects material instances of non-compliance by a client under ISA 250. (5 Marks)
e. Identify and evaluate any ethical threats and professional issues arising from the audit committee’s request for the audit engagement partner to attend the financing meeting. (3 Marks)
f. If loan finance is essential for the company’s survival and uncertainty exists regarding agreement finalization, evaluate additional audit procedures to ascertain if a material uncertainty exists. (10 Marks)
g. Evaluate the impact on the audit report in these scenarios:

  • i. Going concern assumption is appropriate, but material uncertainty exists.
  • ii. Going concern assumption is appropriate, material uncertainty exists, and disclosures are adequate.
  • iii. Going concern assumption is appropriate, material uncertainty exists, but disclosures are inadequate.
  • iv. Going concern assumption is inappropriate. (8 Marks)

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  • 7 Marks

AAA – May 2018 – L3 – SC – Q7b – Forensic Auditing

Outline anti-money laundering requirements for the auditor of Banana Follow Me Limited due to high cash-based transactions and overseas transfers.

Management of Banana Follow Me Limited plans to invest in factory equipment and fittings to attract more customers, using sufficient cash reserves for these capital expenditures. A significant risk associated with money laundering exists due to the high volume of cash transactions and regular overseas bank transfers.

Required:

i. Discuss THREE requirements of an anti-money laundering programme which the auditor of Banana Follow Me Limited should have in place for detecting and reporting suspicion of money-laundering.

(6 Marks)

ii. State ONE example of the criminal offenses connected with money laundering. (1 Mark)

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  • 8 Marks

ATAX – Nov 2018 – L3 – Q4c – Transfer Pricing

Advisory on maintaining the arm's length principle in inter-company transactions for Abbey Limited.

(c) You are the tax controller of Abbey Limited, the holding company of a group of companies involved in various businesses including: trading, manufacturing, distribution, and packaging. The companies from time to time supply goods and services to each other at pre-determined prices.

You are required to:
Advise the board of Abbey Limited on the factors to be considered when the entities transact business amongst themselves to ensure that the arm’s length principle is upheld.
(8 Marks)

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  • 15 Marks

AT – Nov 2022 – L3 – Q5 – Taxation and Corporate Governance

Analyze the tax implications for Yemmysea Beverages Limited’s proposed merger and acquisition arrangements, covering scenarios where a company absorbs another, a merger results in business cessation, and a business is sold or transferred. Additionally, explain the regulatory powers of the FIRS in mergers and acquisitions.

In its bid to increase market power, growth, and enhance operating economies, the Board of Directors of a medium-sized beverage company, Yemmysea Beverages Limited, located in Abeokuta, is considering proposals for a merger or acquisition with another business entity in the same industry. The Chairman of the Board found all the proposals attractive.

However, the Financial Accountant advised that the Board should consider the tax implications associated with each proposed merger or acquisition arrangement. To address this, a reputable tax consulting firm, experienced in mergers, acquisitions, and reorganizations, was recommended to provide expert analysis.

Your firm has now been approached to offer professional advice on the tax implications of each of the following merger or acquisition arrangements:

  • Proposal 1: When an existing company absorbs another existing company.
  • Proposal 2: When a merger results in the cessation of business.
  • Proposal 3: When a business is sold or transferred.

Required:

As the company’s Tax Consultant, submit a report to the Managing Director explaining the following:

  1. Tax implications when an existing company absorbs another existing company.
    (5 Marks)
  2. Tax implications when a merger results in the cessation of business.
    (3 Marks)
  3. Tax implications when a business is sold or transferred.
    (3 Marks)
  4. The powers of the Federal Inland Revenue Service (FIRS) on issues concerning mergers and acquisitions of companies.
    (4 Marks)

Total: 15 Marks

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  • 21 Marks

AA – Nov 2023 – L2 – Q4 – Audit of Public Sector Entities

Identify inherent risks in a non-profit organization and assess control environment weaknesses impacting audit approach.

Greater Tomorrow Foundation (GTF) was established with the aim of providing support to children from disadvantaged backgrounds who wish to participate in sports, such as tennis, athletics, and football. It has benefited the country, with some beneficiaries representing the nation in international competitions.

GTF has a constitution detailing how income can be spent and limits administrative expenditure to one-eighth of its income annually.

GTF’s income comes solely from voluntary donations, including:

  • Cash collected by volunteers from the public.
  • Direct donations from generous individuals.

Certain donations specify that the principal amount cannot be spent, with income generated (interest) allocated to specific activities, like providing sports equipment (e.g., footballs, boots, rackets, sportswear, etc.).

Required:

a. Explain FIVE areas of inherent risk in Greater Tomorrow Foundation (GTF) and explain the effect of each risk on the audit approach. (10 Marks)

b. Explain FIVE reasons why the control environment may be weak in GTF. (10 Marks)

 

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  • 30 Marks

FR – Nov 2023 – L2 – Q1 – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Akamata Nigeria Limited, analyze revaluation adjustments, and assess ethical challenges posed by management.

Akamata Nigeria Limited is a manufacturing company. Its finished products are stored in a nearby warehouse until ordered by the customers. Akamata Nigeria Limited has performed very well in the past, but has been in financial difficulties in recent months due to the removal of petroleum subsidies and floating of exchange rate by the Federal Government of Nigeria. The company has been reorganizing its business to improve performance.

The trial balance of Akamata Nigeria Limited as at March 31, 2023, was as follows:

Description Debit (N’000) Credit (N’000)
Revenue 624,500
Cost of goods manufactured (excluding depreciation) 470,000
Distribution costs 45,300
Administrative expenses 80,100
Restructuring costs 605
Interest received 6,000
Loan notes interest paid 3,195
Land and building (including land N100,000,000) 251,500
Plant and equipment 18,600
Accumulated depreciation at March 31, 2022:
– Buildings 30,300
– Plant and equipment 8,350
Investment properties (at market value) 120,000
Inventories at March 31, 2022 24,260
Trade receivables 46,650
Cash and bank 5,950
Ordinary share capital of N1 each (fully paid) 100,000
Share premium 2,150
Revaluation surplus 15,625
Retained earnings at March 31, 2022 140,385
Ordinary dividend paid 5,000
7% loan notes (2027) 91,250
Trade payables 40,600
Proceeds of shares issued 12,000

Total Debit = 1,071,160
Total Credit = 1,071,160

Additional Information:

  1. Property, plant, and equipment depreciation policies:
    • Building: 5% p.a. on straight-line basis (administrative cost).
    • Plant and equipment: 25% p.a. on reducing balance basis (cost of sales).
  2. Land revaluation on March 31, 2023: N120,000,000.
  3. Estimated income tax for the year ended March 31, 2023: N4,880,000.
  4. Closing inventories as at March 31, 2023, amount to N25,900,000. Inspection shows that a production machine had incorrect setup resulting in mispackaged products costing N250,000 to produce. Additional repackaging cost of N100,000 would enable a sale at N275,000. The mispackaged goods are currently included in inventory at N250,000.
  5. Loan notes are due for repayment by March 31, 2027, with interest accrued for six months to March 31, 2023.
  6. Restructuring costs represent major efforts to improve competitiveness and profitability.
  7. Investment properties required no fair value adjustments during the period.
  8. Issued 10 million new ordinary shares at N1.20 each during the year, recorded under “proceeds of share issue.”

Required:

a. Prepare the statement of profit or loss and other comprehensive income, and the statement of changes in equity for the year ended March 31, 2023. (15 Marks)

b. Prepare the statement of financial position as at March 31, 2023. (10 Marks)

c. As the chief accountant of Akamata Nigeria Limited, you have been instructed by the new managing director (MD) to revise the last financial statement and prepare an attractive six-month forecast for listing on the Nigerian Exchange Limited (NGX), potentially bypassing relevant accounting standards and NGX regulations.

Required:
Identify the motivations of the managing director and outline actions you should consider under this ethical pressure. (5 Marks)

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  • 30 Marks

TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations

Required to prepare tax documentation and compute liabilities for BICCI Nigeria Limited in response to FIRS tax audit report.

You have been invited to make a presentation to the Board of Directors of BICCI Nigeria Limited. Your performance at the presentation will determine your appointment as the Tax Consultant to the company.

BICCI Nigeria Limited, a trading company, was incorporated on 2 March 2009. It commenced business on 2 October of the same year, making accounts up to 30 September annually. The shareholders invested N18 million in non-current assets before the company commenced business in 2009.

Other information provided:

  1. Authorized, Issued, and Fully Paid-Up Capital – N10 million.
  2. Value Added Tax (VAT) and Withholding Tax (WHT) returns filed for 2010–2013 were carried out 2 months after each transaction month.
  3. Companies Income Tax (CIT) and Tertiary Education Tax (TET) returns were filed on 30 June for the 2011 to 2014 Assessment Years.

Extracts from the accounts (2010–2013):

On 15 July 2014, FIRS inspectors visited BICCI, informing management of an upcoming tax audit on 25 August 2014. They requested the following documents:

  1. Audited Accounts (2010–2013)
  2. Bank Statements (2010–2013)
  3. Trial Balance for each year
  4. Evidence of Tax Returns filed (CIT, VAT, WHT, TET)
  5. General Ledger printouts
  6. Proof of tax payments
  7. Tax registration evidence
  8. Tax Clearance Certificates
  9. WHT Credit Notes, if any

FIRS Interim Tax Audit Report (summarized):

Item 2013 2012 2011 2010
Revenue (N’000) 25,320 21,522 13,989 7,694
VAT on Revenue 8,862 7,533 4,896 3,462
Undisclosed Revenue 16,458 13,989 9,093 4,232
Directors’ Current Account 19,578 21,228 19,250 18,000
Payments under WHT:
– Directors’ Fees 1,625 2,125 1,145 960
– Rent 3,500 3,500 2,625 2,625
– Professional Fees 1,200 1,200 950 950
– Commission 2,825 1,875 970 376

Additional Adjustments:

  1. Cost of Sales written back: 60%
  2. Selling & Distribution expenses written back: 60%
  3. Admin expenses written back: 60%

Requirements:

a. List the documents required by FIRS for the Interim Tax Audit. (3 Marks)
b. Calculate BICCI Nigeria Limited’s potential tax liabilities per the Interim Tax Audit. (12 Marks)
c. Prepare a schedule for VAT and WHT receipts collected by BICCI. (7 Marks)
d. Advise management on possible tax consequences if they do not respond to the audit. (8 Marks)

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  • 40 Marks

AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing

Analysis of audit risks and control objectives in a joint audit and compliance scenario.

Chukwuemeka & Co. (Chartered Accountants) has been auditors to GED Manufacturing Nigeria Plc. There have been some regulatory and compliance issues for which the company was sanctioned and paid penalties to the Financial Reporting Council of Nigeria.

At the board of directors meeting to consider the last annual report audited by the firm, some of the previous problems caused by the auditors were raised and discussed. Following the reoccurrence of such issues, it was proposed that another audit firm be engaged in addition to the present firm.

To achieve their objective, a bigger firm that has international affiliation was considered to take a leading role in a joint audit arrangement and to ensure appropriate compliance. Your firm has been approached for the appointment. A meeting was scheduled between your firm, Chukwuemeka & Co., and the executive management of GED Manufacturing Nigeria Plc.

After the meeting, your firm was subsequently appointed, and the necessary formalities were properly followed. Your partner has directed that you liaise with Chukwuemeka & Co. to obtain the necessary materials for the preparation of the audit and that you review the prior year working papers to understand the issues. Your assessment of the documents obtained from the other auditor revealed the following, amongst others:

(i) The work done on the process of dispatch of goods and invoicing was not considered sufficient and appropriate.

(ii) The IT operations of the company had weak controls such that it was possible for some staff to override some of the existing controls.

Required:

a. Explain the risks inherent in the dispatch of goods and invoicing. (10 Marks)

b. Discuss the control objectives and principal controls that are relevant to the process of dispatch of goods and invoicing. (10 Marks)

c. Explain the limitations of a joint audit. (5 Marks)

d. Discuss the benefits of audit carried out by an internationally affiliated audit firm. (10 Marks)

e. Explain briefly the importance of audit working papers. (5 Marks)

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