MAXIMUM MARKS: 100 ALL QUESTIONS CARRY EQUAL MARKS
SECTION AUDITING QUESTION NO 1 Apart from Inspection, list and explain FIVE recognized audit procedures. Explain the purpose of a management representation letter and the actions the auditor will take if initially management refuses to provide this letter
QUESTION NO 2 Explain the term audit risk in the context of client acceptance. Discuss the general safeguards contained within the audit professions conceptualframework.
QUESTION NO 3 Describe the responsibilities of auditors and of management in relation to the design and operation of internal control systems, and explain the main role of Audit Committee.
QUESTION NO 4 Discuss what is meant by sufficient appropriate audit evidence
QUESTION NO 5 Explain what is meant by the following terms: (i) Audit risk (ii) Inherent risk (iii) Control risk (iv) Detection risk
QUESTION NO 6 List and explain the duties of an auditor. Discuss the relationship between auditors and company directors? State the legal rights of an auditor of a limited company also Discuss whether directors have the authority to dismiss auditors?
SECTION TAXATION QUESTION NO 7 Mr. Hammad has disposed of his business to M/S hanif Limited, a Pakistani resident company. The value of assets and liabilities as on that date were, Assets at Cost Rs. 10,000,000 Liabilities taken over by company Rs. 6,000,000 The company issued 250,000 ordinary shares of Rs. 10 each as consideration. Calculate the value of shares received as consideration. and also calculate the capital gain on disposal if shares are sold as 125,000 shares @Rs. 20 per share 75,000 shares @Rs. 35 per share 50,000 shares @Rs. 15 per share
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 Explain the tax consequence of following categories of provident funds. 1. Government provident fund 2. Recognized provident fund 3. Unrecognized provident fund
QUESTION NO 10 Mr. Ehsan has rented out his house. Compute his taxable property income from the following information 1. Monthly rent of house Rs.18,000 2. Security deposit received at start of year Rs.200,000 3. Repair and maintenance charges Rs.38,000 4. Property related taxes Rs.7,200 5. Rent collection charges Rs.26,400 6. Legal charges ( including Rs. 5,000 due but not paid yet) Rs.15,000
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 ABC LTD acquired a foreign currency loan amounting to US$40,000 in the beginning of year 200A. The loan was repayable in eight half yearly installments of US$5,000.the loan was utilized for import of a plant valuing equal to the amount of loan. at the time of obtaining the loan and importing the plant was 1US$=Rs.50 The company incurred the following expenses in connection with the plant Insurance and sea freight Rs. 20,000 Port expenses Rs. 5,000 Custom duty and excise duty on import Rs. 55,000 Inland freight octroi charges Rs. 10,000 Expenses on installation of plant Rs. 10,000 After payment of 4 installments the exchange rate fluctuated and became 1US$=Rs.55 Required: Compute the cost of plant prior and after change in exchange rate and calculate depreciation for the years 200A,200B,200C and 200D if deprecation is charged @ 15% on WDV.