Tax Investigation

AAA – May 2016 – L3 – Q2b – Ethical Issues in Auditing

Discuss the implications of a tax authority investigation into a client after an unmodified audit opinion.

Question

(b) You are a senior manager in Nnamdi & Co, a firm of Chartered Accountants in Nigeria. Recently, you have been assigned specific responsibility for undertaking annual reviews of existing clients. The following situations have arisen in connection with three clients:

i. Nnamdi & Co was appointed auditor and tax advisor to Unicorn Co last year and has recently issued an unmodified opinion on the financial statements for the year ended March 31, 2016. To your surprise, the tax authority has just launched an investigation into the affairs of Unicorn on suspicion of under-declaring income.
(7 Marks)

ii. The chief executive of Hassan Co., an exporter of specialist equipment, has asked for advice on the accounting treatment and disclosure of payments being made for security consultancy services. The payments, which aim to ensure that consignments are not impounded in the destination country of a major customer, may be material to the financial statements for the year ending December 31, 2015. Hassan does not treat these payments as tax-deductible.
(4 Marks)

iii. Your firm has provided financial advice to the Adetunji family for many years and this has sometimes involved your firm in carrying out transactions on their behalf. The eldest son, Verni, is to take up a position as a senior government official to a foreign country next month.
(4 Marks)

Required:
Identify and comment on the ethical and other professional issues raised by each of these matters and state what action, if any, Nnamdi & Co should now take.

Answer

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Tags: Audit Review, Client Relations, Ethical Concerns, Professional Judgment, Tax Investigation
Level: Level 3

Topic: Ethical Issues in Auditing

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

Question

HUSNA Nigeria Limited was incorporated on May 13, 2015, to manufacture adhesives using gum arabic. The company, led by Mr. Onyeocha Ben, sought to benefit from the Industrial Development (Income Tax Relief) Act. They applied and were granted a Pioneer Certificate, with the production day certified as July 1, 2015.

The company’s financial records provide the following data:

(i) Accumulated profit as of June 30, 2016 – ₦41,250,000
(ii) Capital expenditure during the Pioneer period (certified by FIRS):

Building – ₦20,000,000
Property, Plant & Equipment – ₦18,750,000
Motor vehicles – ₦12,500,000
Furniture & Fittings – ₦6,250,000

(iii) Adjusted profits from the new trade after the pioneer period:

For 6 months to December 31, 2016 – ₦15,000,000
For the year to December 31, 2017 – ₦22,500,000

Required:
a. Explain briefly the conditions for granting a Pioneer Status to a company.
b. Compute the tax liabilities of the company for the relevant assessment years.
c. Differentiate between Tax Audit and Tax Investigation.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Pioneer Status, Tax Audit, Tax computation, Tax Investigation, Tax liabilities
Level: Level 3

Topic: Taxation of Companies
Series: NOV 2017

AAA – May 2016 – L3 – Q2b – Ethical Issues in Auditing

Discuss the implications of a tax authority investigation into a client after an unmodified audit opinion.

Question

Required:
Identify and comment on the ethical and other professional issues raised by each of these matters and state what action, if any, Nnamdi & Co should now take.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Review, Client Relations, Ethical Concerns, Professional Judgment, Tax Investigation
Level: Level 3

Topic: Ethical Issues in Auditing

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

Question

The company’s financial records provide the following data:

(i) Accumulated profit as of June 30, 2016 – ₦41,250,000
(ii) Capital expenditure during the Pioneer period (certified by FIRS):

Building – ₦20,000,000
Property, Plant & Equipment – ₦18,750,000
Motor vehicles – ₦12,500,000
Furniture & Fittings – ₦6,250,000

(iii) Adjusted profits from the new trade after the pioneer period:

For 6 months to December 31, 2016 – ₦15,000,000
For the year to December 31, 2017 – ₦22,500,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Pioneer Status, Tax Audit, Tax computation, Tax Investigation, Tax liabilities
Level: Level 3

Topic: Taxation of Companies
Series: NOV 2017

Question Tag: Tax Investigation

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AAA – May 2016 – L3 – Q2b – Ethical Issues in Auditing

Discuss the implications of a tax authority investigation into a client after an unmodified audit opinion.

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

AAA – May 2016 – L3 – Q2b – Ethical Issues in Auditing

Discuss the implications of a tax authority investigation into a client after an unmodified audit opinion.

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

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AAA – May 2016 – L3 – Q2b – Ethical Issues in Auditing

Discuss the implications of a tax authority investigation into a client after an unmodified audit opinion.

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AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

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AAA – May 2016 – L3 – Q2b – Ethical Issues in Auditing

Discuss the implications of a tax authority investigation into a client after an unmodified audit opinion.

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AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

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