CSS Accountancy & Auditing 2017

PART-II

SECTION-A (AUDITING)

Q.No. 2. What system of Internal check would you recommend for a large manufacturing company to prevent fraud in connection with the purchase of raw material on credit basis? (20)

Q.No. 3. A fraud has been committed in a business. Being a Manager of Accounts, you are asked by the authorities to take up investigative measures and steps to extract the fraudulent matter. Discuss the measures and steps you will take in this regard. (20)

Q.No. 4. What is meant by Auditor's Report? Describe the key characteristics of a good audit report, along with the significance of Auditor's report to show the transparent picture of the company. (20)

SECTION-B (BUSINESS TAXATION)

Q.No. 5. (A) Define the concept of sales tax & describe the sales tax act of 1990. Identify the official positions of Inland revenue officers and their powers.

(B) Mr. Sartaj is registered under the Sales Tax Act, 1990 as a manufacturer as well as a commercial importer. He has provided you the following information for the month of February, 2016:

Export sales – manufactured goods 35

Local sales of exempt manufactured goods 25

Taxable supplies – manufactured goods 130

Taxable supplies – commercial imports 70

Purchases Local purchases of raw material from:

Registered person 180

Unregistered persons 60

Commercial imports 50

All the above amounts are exclusive of sales tax. Commercial imports have been stated at C&F value and are subjected to customs duty at the rate of 10%. There was no stock of commercial imports at the beginning or end of the month.

Required:

Compute the sales tax liability of Mr. Sartaj along with input tax to be carried forward (if any) in his sales tax return for the month of February 2016. (Ignore the effect of minimum value addition in case of commercial imports)

Q.No. 6. (A) Identify the main features of Income Tax ordinance 2001. Also discuss the exemptions and tax concessions available to a taxpayer under that ordinance.

(B) Mr. Ahmed is an employee of a company. He has submitted the following information for the tax year 2016.

Basic Salary per annum 340,000

Bonus 56,000

Cost of living allowance 66,000

Dearness allowance 32,000

Rent free unfurnished accommodation – annual value 162,000

Company maintained car for personal and official use, cost of vehicle is. 980,000

Utility allowance 58,000

Leave encashment 31,600

Leave Fare Assistance provided every year 22,600

Hotel bills paid by the company relating to a pleasure trip 28,400

Employee’s contribution towards provident fund 30,000

Zakat paid under Zakat and Ushr Ordinance 15,000

Tax deducted by the company for salary 35,000

Required: Compute the total income, taxable income and tax liability of Mr. Ahmed.

SECTION-C (BUSINESS STUDIES & FINANCE)

Q.No. 7. (A) Identify the major barriers that hamper global business in an open economy.

(B) Consider a coupon bond that has a face value of $1000, has a yield of 16%, pays a semiannual coupon of 70, and matures in one year 'assuming that the bond will pay the face value amount that the cost coupon payment on the maturity date. Calculate the price of the bond. (20)

Q.No. 8. (A) Describe the economic systems, also Identify which system is more beneficial for the economic development of the country.

(B) XYZ company presently pays a dividend of $ 1.50 per share on its common stock. The company expects to increase the dividend at a 20% annual rate the first four years and at the rate of 13% at the next four years then the growth on the dividend at a 7% thereafter. This phased growth patterns are in keeping with the expected life cycle of earnings. You are required a 16% return to invest in this stock. What value should you place on a share of this Stock?