MAXIMUM MARKS: 100 ALL QUESTIONS CARRY 10 MARKS SECTION AUDITING QUESTION NO 1 Outline the importance of the external auditor as a verifier of financial information and discuss the level of assurance provided by an audit and a review engagement.
QUESTION NO 2 Describe the matters which the external auditor should consider at the planning stage to assess the effectiveness of a companys internal audit department.
QUESTION NO 3 Describe the matters you should consider and the action you will take to ensure your firm remains independent as external auditor of the annual financial statements. List down 4 advantages of external audit of financial statements.
QUESTION NO 4 Consider the risks associated with the audit. Describe the ethical matters you should consider in deciding whether your audit firm should accept the audit. This should include considering whether your firm has the technical and logistical ability to carry out the audit.
QUESTION NO 5 Describe the reasons why it is important that auditors should plan their audit work. Describe the matters you will consider in planning the audit.
QUESTION NO 6 Identify and describe five of the procedures for obtaining audit evidence. For each of the procedur es, describe an audit test using that procedure to obtain evidenceas to the balance of plant and equipment including the related balances of accumulated depreciation and charges to income.
SECTION TAXATION QUESTION NO 7 Mr. Ahmed earned an income of Rs.350, 000 from his business carried on as a sole trader. He also earned an amount of Rs.150, 000 from an AOP in which he is a member. Compute the tax liability of Mr. Ahmed. Also discuss the rules for taxation of an individual regarding income from AOP.
QUESTION NO 8 Mr. Arif is an employee of a company he has submitted the following information for the tax year 200X Basic salary per annum Rs.240,000 Bonus Rs.36,000 Cost of living allowance Rs.36,000 Dearness allowance Rs.12,000 Rent free unfurnished accommodation annual value Rs.132,000 Company maintained car for personal and private use Rs.880,000 Utility allowance Rs.48,000 Leave encashment Rs.21,600 LFA provided every year Rs.21,600 Hotel bills paid by employer relating private family trip Rs.26,400 Employer contribution towards provident fund Rs.20,000 Zakat paid under zakat and ushr ordinance Rs.5,000 Tax deducted by the company from salary Rs.25,000 Required: compute the total income, taxable income and tax liability of Mr. Arif.
QUESTION NO 9 Briefly discuss the tax treatments of contribution to an approved provident fund by employee and employer. List down the criteria for official recognition of a provident fund.
QUESTION NO 10 Mr. Imran has a building, which is rented out at a monthly rent of Rs. 25,000. He incurred the following annual expenses in respect of the house Repair charges Rs.10,000 Insurance premium Rs.8,000 Interest on loan from HBFC for the house Rs.12,000 Property tax Rs.5,000 Electricity bills Rs.6,000 Water bills Rs.7,200 Gas bills Rs.4,800
As per agreement the rent includes the payment on account of utility bills. Required: Compute the taxable income and the tax liability under each of the following conditions; 1. Rent includes Rs.3,000 P.M on account of utilities provided to tenant. 2. The rent deed does not clearly specify the amount received on account of utilities.
QUESTION NO 11 AA company is a partnership firm. For the tax year ended 30 th june 200A the firm declared the net profit of Rs.400,000. The scrutiny of the profit and loss account revealed that the following deductions were made while preparing the financial statements Income tax for previous year Rs. 30,000 Tax at source deducted by the customer Rs.15,000 Salary paid to an employee without deduction of tax Rs. 200,000 Salary paid to partner A Rs. 60,000 Salary paid to partner B Rs. 5,000 Salary paid PM to an employee through cash (tax deducted at source) Rs. 20,000 Contribution to unrecognized provident fund Rs. 30,000 Donation to unapproved institutions Rs. 10,000 Donation to approved institutions Rs. 20,000 Manager of the firm was paid the following amounts Salary Perquisites and allowances
Rs. 80,000 Rs. 50,000 Accounting depreciation Rs. 55,000 Required: Compute the taxable income of the firm considering that depreciation under the income tax is Rs.45,000.
QUESTION NO 12 A leasing company leased out a plant costing Rs.1,000,000 in tax year 200A. the annual lease rentals were agreed at Rs.240,000 for 5 years. Compute the depreciation to be allowed for years 200A,200B,200C,200D and 200E.