Series: NOV 2021

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  • 16 Marks

TAX – Nov 2021 – L2 – Q7 – Tax Administration

Explanation of five different aspects of tax administration that TAXPRO MAX can handle.

Tago Nigeria Limited was incorporated in 2009 as a trading company. It supplies
office furniture, equipment and other office materials to end users.

Due to the favourable business climate in recent years, the company achieved a
gross turnover of N120,000,000 in 2020. The directors were impressed by the profits
posted by the company, hence the decision to computerise the accounting system of
the company.
You were appointed the tax consultant to the company in 2018. You are aware that
in 2006, the Federal Inland Revenue Service (FIRS) deployed the first tax portal
(Webportal) to automate and streamline taxpayer‟s registration and other tax
administration system (ITAS) known as SIGTAS. This was implemented though its
deployment was stalled.

Following the enactment of the Finance Act, 2020, the Federal Inland Revenue
Service is empowered to automate filing of tax returns and payment processes.
You attended a seminar organised by the Federal Inland Revenue Service in June
2021, to inform tax consultants of the adoption of a locally developed tax
management solution known as TAXPRO MAX. The FIRS insisted that manual filings
of tax returns would no longer be allowed.
At a meeting held with the Managing Director of Tago Nigeria Limited, you intimated
him of the tax development. He was worried that there could be a delay in filing of
tax returns for the year ended December 31, 2020, more so when taxpayers are yet to
be fully aware of this new development.

Required

Explain to the management FIVE different aspects of tax administration that the tax management solution known as TAXPRO MAX can handle.

 

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  • 15 Marks

TAX – Nov 2021 – L2 – Q6 – Value Added Tax (VAT)

Explanation of when goods and services are deemed to be supplied in Nigeria according to section 2 of the VAT Act.

Taxable supplies of goods and services are those listed under the First Schedule of
the Value Added Tax Act Cap VI for 2004 (as amended). Essentially, these are goods
and services liable to value added tax at the prescribed rate.
Required:
Explain when goods and services shall be deemed to be supplied in Nigeria in
accordance with section 2 of VAT Act (as amended).

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  • 15 Marks

TAX – Nov 2021 – L2 – Q5 – Companies Income Tax (CIT)

Explanation of documents required for tax registration, time lag for filing tax returns, and penalties for late filing of returns.

QUESTION 5
The Companies Income Tax Act Cap C21 LFN 2004 (as amended) empowers the
Federal Inland Revenue Service to assess the income of corporate organisations.
Corporate organisations are required to file tax returns within a specified period of
time to the relevant tax authority.
Required:
a. Explain the documents/information required to be forwarded to the relevant tax
authority when registering with the nearest integrated tax office. (5 Marks)
b. State the time lag for filing the first set of returns and subsequent ones.
(5 Marks)
c. State the penalty for late filing of tax returns on the due dates. (5 Marks)
(Total 15 Marks)

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  • 5 Marks

TAX – Nov 2021 – L2 – Q4b – Tax Incentives and Reliefs

Explanation of the rules governing loss relief for companies, including carry forward, loss limitation, and cessation rules.

Explain FIVE rules governing loss relief for companies.

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  • 15 Marks

TAX – Nov 2021 – L2 – Q4a – Companies Income Tax (CIT)

Computation of income tax payable for Ajani-Ogun Ventures Limited from 2018 to 2021 years of assessment.

Ajani-Ogun Ventures Limited was incorporated on February 1, 2012, and commenced business on September 1, 2013. The company makes up accounts to August 31, every year. The following additional information is provided:

  1. Adjusted (loss)/profit:
    • Year ended August 31, 2017: (N95,000)
    • Year ended August 31, 2018: N55,000
    • Year ended August 31, 2019: N35,000
    • Year ended August 31, 2020: N65,000
  2. Capital Allowances for each year of assessment:
    • Year ended August 31, 2018: N6,500
    • Year ended August 31, 2019: N5,000
    • Year ended August 31, 2020: N4,200
    • Year ended August 31, 2021: N4,000

The Finance Director was worried that the tax officials would soon conduct a tax
audit of their financial transactions and he wanted to know the tax liabilities
payable to the Federal Inland Revenue Service for the relevant assessment years.
During the year ended August 31, 2020, the company achieved a revenue of
N20,000,000.

Required:
a. Compute the income tax for 2018 to 2021 years of assessment, taking into consideration the provisions of the Finance Act, 2019. Ignore minimum tax computation. (15 Marks)

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  • 5 Marks

TAX – Nov 2021 – L2 – Q3c – Value Added Tax (VAT)

Explanation of the merits and demerits of Value Added Tax (VAT) as a consumption tax.

Explain the merits and demerits of VAT

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  • 6 Marks

TAX – Nov 2021 – L2 – Q3b – Value Added Tax (VAT)

Explanation of penalties associated with VAT non-compliance including failure to register, failure to notify of address changes, and failure to submit returns.

Explain the penalties associated with the following:

i. Failure to register for VAT return (2 Marks)
ii. Failure to notify the FIRS of change of address or cessation of trade or business (2 Marks)
iii. Failure to submit VAT returns (2 Marks)

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  • 9 Marks

TAX – Nov 2021 – L2 – Q3a – Value Added Tax (VAT)

Calculation of total VAT payable by Adegboyega Enterprises to the Federal Inland Revenue Service (FIRS) for product sales.

Adegboyega Enterprise is a manufacturing outfit based in Jankara, Lagos State. In 2020, the company sold its vatable product to a wholesaler, Ikeja Venture, for N3,500,000. The wholesaler sold the products to a retailer, Mrs. Adeosun, for N4,900,000, who finally sold it to consumers for N6,300,000 (VAT inclusive). Assume there was no closing inventory at each stage of the transaction.

Required:
a. Compute the total VAT payable to the Federal Inland Revenue Service by Adegboyega Enterprises on the transactions stated above.

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  • 20 Marks

TAX – Nov 2021 – L2 – Q2 – Companies Income Tax (CIT)

Computation of interest deductible under section 24 of CITA 2004 and treatment of excess interest for XYZ Limited.

XYZ Limited was incorporated on August 31, 2012, and it commenced business on May 31, 2013. Diki (Malaysia) Limited is its subsidiary in Malaysia. An extract of the financial statements of XYZ Limited for the year ended December 31, 2020, revealed the following:

Assessable profit: N2,000,000

Interests and depreciation deducted before arriving at the assessable profit are:

  • Interest on loan paid to Diki (Malaysia) Limited: N1,050,000
  • Interest on loan paid to other creditors: N1,000,000
  • Depreciation: N400,000

It was discovered that N450,000 of the loan paid to other creditors was in respect of a loan obtained to generate tax-exempt profits.

The Managing Director of XYZ Limited has asked you as a tax consultant to explain the provisions of section 24 of CITA 2004 (as amended) and the Seventh Schedule in respect of the interest deductible by a Nigerian company.

Required:
a. Compute the interest deductible in the relevant assessment year. (16 Marks)
b. Explain how the excess interest not deducted in the relevant assessment year would be treated. (4 Marks)

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  • 30 Marks

AX – Nov 2021 – L2 – Q1 – Personal Income Tax (PIT)

Calculation of personal income tax liability for two job offers and providing advice on the offer that yields a higher income after tax.

Miss Opeyemi Olunba is a young engineer who has been working in an oil sector for
over 5 years. She currently earns a gross salary of N10,000,000 per annum. She
recently attended two interviews for a new job at Joke Oil & Gas in Rivers State and
Dabiri Hotels & Suite in Lagos State.
She has been called by the two companies to assume office on April 1, 2021. The
following salaries and allowances were offered by the two companies:

Additional information:

  1. If Miss Opeyemi accepts the offer from Joke Oil & Gas, she will rent out her Lagos apartment for N20,000,000 per annum but will need a loan of N12,000,000 at 20% interest to modify the apartment.
  2. She will pay rent of N5,000,000 in Port Harcourt if she relocates.
  3. She maintains her child, a student at St. John University,
  4. She also supports her parents.
  5. She pays a life assurance premium of N5,000,000 annually.
  6. Her employers will deduct contributions for the National Housing Fund (N5,000,000) and Pension Fund (N3,000,000).
  7. She also pays National Health Insurance Premium (N1,000,000).

Required:

a. Compute Miss Opeyemi’s personal income tax liability for the relevant year of assessment for both offers.
b. Advise her on which employment will give her a higher income after tax.

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  • 15 Marks

CSME – Nov 2021 – L2 – Q7 – Corporate Ethics Programs

Explanation and purpose of corporate code of ethics and its content for organizations.

It has become common practice among organizations to have a Corporate Code of Ethics.

Required:

a. Explain Corporate Code of Ethics and its purpose. (5 Marks)
b. Provide an outline of the content of Corporate Code of Ethics. (10 Marks)
(Total 15 Marks)

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  • 15 Marks

CSME – Nov 2021 – L2 – Q6 – Ethics in Business

Prepare a presentation on emotional intelligence for entry-level graduates.

You have been invited to train entry-level graduates of your organization on several topics in soft skills.

Required:
Using the mixed model, prepare a brief presentation on the following:
a. Meaning and characteristics of emotional intelligence. (9 Marks)
b. Uses of emotional intelligence. (6 Marks)

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  • 9 Marks

CSME – Nov 2021 – L2 – Q5B – Risk Management and Corporate Strategy

Evaluate the roles of the board of directors and risk committees in managing risks.

Evaluate the roles of the following in risk management:
i. Board of directors. (4 Marks)
ii. Risk committees. (5 Marks)

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  • 6 Marks

CSME – Nov 2021 – L2 – Q5A – Risk Management and Corporate Strategy

Explain risk management and the process of risk mapping for a new company.

A friend of yours is planning to establish a company with a board of directors and committees. He hopes the company will have a system to manage its operations and the associated risks.

Required:
Explain:
i. Risk management (2 Marks)
ii. The process and use of risk mapping (4 Marks)

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  • 20 Marks

CSME – Nov 2021 – L2 – Q4 – Ethics in Business

Evaluate the morality of government approval for the Nesquake coffee processing plant using ethical models.

The maker of Nesquake, a popular coffee brand, is planning to build a coffee processing plant in Epe, Lagos State. By virtue of production capacity, this will be the biggest coffee plant in Sub-Saharan Africa. This plant has the capacity not only to meet the coffee needs of the country but also meet the premium and regular coffee demands of West and Central Africa, generating over one thousand direct and ten thousand indirect jobs in the process. It is anticipated that the plant will provide huge company and personal income tax revenue to the government while also generating foreign exchange for the country. The company plans to use eco-friendly cutting-edge technology in its production processes. However, as the only available option, the company intends to import 100% of the coffee beans from Katanga, an East African country notorious for the use of child labour in the production of coffee beans. Recently, Amnesty International called for the boycott of Katanga’s coffee beans due to what has been adjudged unethical and inhuman labour practices. Despite this fact, the makers of Nesquake have secured all necessary approvals from the Federal Government and have consequently commenced construction of the coffee processing plants.

Required:
Evaluate the morality of government’s approval of the project using the following:
a. Tucker’s 5 Questions model (10 Marks)
b. American Accounting Association (AAA) model (10 Marks)

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  • 20 Marks

CSME – Nov 2021 – L2 – Q3 – Corporate Social Responsibility (CSR)

Discuss the nature of CSR, its theories, aspects, and implementation steps for the company.

At the last board meeting of a company, there was a heated argument about whether or not the company should have Corporate Social Responsibility (CSR) programmes. Some members of the board see CSR as a waste of resources, while others see it as a tool for achieving organizational goals.

Required:
a.
i. What is Corporate Social Responsibility (CSR)? (2 Marks)
ii. Explain stakeholders and shareholders theories on CSR. (2 Marks)

b. Explain to the board FIVE aspects of CSR. (10 Marks)

c. Advise the company on steps to be taken in implementing a CSR policy. (6 Marks)

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  • 20 Marks

CSME – Nov 2021 – L2 – Q2 – Risk Management and Corporate Strategy

Provide advice on the nature and role of the risk committee and elements of ISO 31000 for XYZ Limited.

XYZ Limited is a company seeking to meet regulatory requirements for listing on the Nigeria Stock Exchange. As such, the company wants to make several changes in its risk management system.

Required:
You have been contracted to provide advice on:
a. The nature and role of the risk committee. (8 Marks)
b. The elements of the ISO 31000 risk management framework, including the 7Rs and 4Ts of implementing an enterprise-wide risk management system. (12 Marks)

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  • 30 Marks

CSME – Nov 2021 – L2 – Q1 – Strategic Implementation

Advise on organizational structures and change management strategies for Bluebird Group Plc's transformation.

Bluebird Group Plc is a Nigerian multinational manufacturing company with head
office in Nigeria and factories in Nigeria, Ghana, Senegal, Cote d‟Ivoire and Mali. The
company produces electrical and electronic appliances which include refrigerators,
washing machines, pressing irons, television sets and cameras. It controls about 10%
of the market for these products in the West African market.
The company hopes to improve on its performance and competitive position over the
next ten years. However, with the COVID-19 pandemic came acceleration of
developments that heralded the fourth industrial revolution (also known as Industry
4.0) which has reshaped the contemporary business environment. Some of the
changes brought about by industry 4.0 include introduction of artificial intelligence,
manufacture of smart home appliances, use of robotic and blockchain technology
which could enable the head office access all enterprise activities across all locations
on real time. Many of the competitors of Bluebird Group have started introducing
these changes into their operations to maintain and improve their competitive
position.
In order to remain competitive and maintain its leadership position in the industry,
the management of Bluebird Group Plc has decided to make requisite changes in all
its operations. Its goal is to improve efficiency, effectiveness, competitiveness,
innovativeness and ability to respond quickly to rapid changes in the business
environment. In order to achieve these, the company hopes to introduce up-to-date
cutting edge technology in its entire value chain. It also hopes to commence
production of smart home appliances to meet growing consumers‟ demand. To this
end, the company has contracted relevant vendors to supply needed equipment for
smart manufacturing and automation. It is anticipated that these changes have to be
supported by needed transformation in the company‟s organisational structure. Also,
the company intends to introduce Just-in-time production system and lean
manufacturing which will enable it produce bespoke appliances for different groups
of consumers. This is more compelling by the need to switch to team-based cross
functional approach in carrying out all its operations.

The company also recognises the need for reskilling of its workers as a fall-out of the
introduction of industry 4.0 to its operations to combat redundancy and reduce
layoffs.
The management of Bluebird Group Plc anticipates that these planned
transformations will make it necessary to take the following steps: Firstly, the
implementation of an effective enterprise-wide risk management strategy to mitigate
the attendant risks that such changes will bring. Secondly, there is the need to
implement an effective change management strategy for the anticipated outcomes to
be realised. The need for this is more evident with fear of retrenchment being
expressed by workers‟ trade unions.
You have just been engaged as a consultant to the company to advise on effective
business process reengineering and change management

Required:
a.
i. Explain briefly suitable organisational structures available to Bluebird Group
Plc. and their respective merits and demerits. (10 Marks)
ii. Advise the management of Bluebird Group Plc. on the best organisational
structure to adopt to achieve its stated objectives. (2 Marks)
b.
i. Explain FOUR Mintzberg‟s organisational configurations. (4 Marks)
ii. Drawing from the Mintzberg organisational configuration model, advise
Bluebird Group on the best organisational configuration to adopt. (3 Marks)
c. From the given scenario, identify the various risks associated with the proposed
changes to Bluebird Group Plc. (5 Marks)
d. Using the Gemini 4Rs Model, suggest to Bluebird Group an effective change
management strategy. (6 Marks)

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  • 15 Marks

PSAF – Nov 2021 – L2 – Q7 – Government Accounting Concepts and Principles

Calculate NPV for projects, profitability index, and discuss ranking differences.

Otunba Local Government wishes to boost its revenue generation and six possible capital investments have been identified. However, the Local Government only has access to a total of N6,200,000. The projects may not be postponed until a future period, and it is unlikely that similar investment opportunities will occur.

Expected net cash flows are:

Projects A and E are mutually exclusive while all the projects are believed to be of similar risk to the Local Government’s existing capital investments. Any surplus funds may be invested in the money market to earn a return of 9% per year. The money market may be assumed to be an efficient market. The Local Government’s cost of capital is 12% per year.

Required:

(a) Calculate the expected net present value for each project, and rank the projects. (8 Marks)
(b) Assuming the projects are divisible, calculate the Profitability Index for each project and rank the projects to determine how the money would be best invested. (6 Marks)
(c) State why the rankings in (b) differ from that in (a) above. (1 Mark)

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  • 15 Marks

PSAF – Nov 2021 – L2 – Q5 – Government Revenue

Discuss dimensions of revenue sharing and principles of revenue allocation in a federation.

Government, like any other economic unit, needs funds which can be raised from various sources for the purpose of financing its activities. Public revenue refers to income generated by government from its activities or operations.

Required:

a. Discuss the TWO dimensions or patterns of revenue sharing in a Federation. (5 Marks)
b. Explain FIVE principles of revenue allocation. (10 Marks)

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