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英国特许公认会计师考试（ACCA）
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P7高级审计与认证业务
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简答题
Section B – TWO questions ONLY to be attempted
3、The audit of Davis Co’s financial statements for the year ended 30 November 2017 is nearing completion and the auditor’s report is due to be signed next week. Davis Co manufactures parts and components for the aviation industry. You are conducting an engagement quality control review on the audit of Davis Co which is a listed entity and a significant new client of your firm. The draft financial statements recognise revenue of $8·7 million, assets of $15·2 million and profit before tax of $1·8 million.
You have identified the following issues as a result of your review:
(i) The planned audit approach to trade payables was to place reliance on purchasing controls and keep substantive tests to a minimum. During controls testing on trade payables, from a random statistical sample, the audit team identified three purchase orders which had not been authorised by the procurement manager. On review of the supporting documentation, the audit team concluded that the items were legitimate business purchases and therefore concluded that no additional procedures were required. (4 marks)
(ii) Following a review of petty cash transactions, the audit assistant identified that the petty cashier paid for taxi fares for personal, non-business journeys with a total value of $175. Following discussions with the audit assistant, you have ascertained that he did not report the matter further as the amount is immaterial. The audit assistant also commented that the petty cashier is his brother and that he did not want to get him into trouble. (6 marks)
(iii) Cut-off testing on revenue has identified two goods despatch notes, dated 2 December 2017, for items sent to Chinn Co, with a combined sales value of $17,880 which had been included in revenue for the year ended 30 November 2017. The client’s financial controller, David Mount, has explained that Chinn Co does not order on a regular basis from Davis Co. In the absence of a regular payment history with Chinn Co therefore, and in order to minimise the receivables collection period from this particular customer, the sales invoice is raised and sent to the customer on the same day that the sales order is received. The average time period between the receipt of an order and despatching the goods to the customer is approximately one to two weeks. The audit working papers have concluded that no further investigation is necessary. (6 marks)
(iv) The finance director, Leslie Gray, has not completed the tax computation for the year ended 30 November 2017. He has recently asked the audit assistant to calculate the company’s tax payable for the year on the basis that as a recently qualified chartered certified accountant, the audit assistant was more up to date with recent changes in tax legislation. (4 marks)
Required:
Evaluate the quality control issues and the implications for the completion of the audit including any further actions which should be taken by your audit firm. Your answer should include the matters to be communicated to management and to those charged with governance in relation to the audit of Davis Co.
Note: The split of the mark allocation is shown against each issue described above.
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【简答题】
Section B – TWO questions ONLY to be attempted
3、The audit of Davis Co’s financial statements for the year ended 30 November 2017 is nearing completion and the auditor’s report is due to be signed next week. Davis Co manufactures parts and components for the aviation industry. You are conducting an engagement quality control review on the audit of Davis Co which is a listed entity and a significant new client of your firm. The draft financial statements recognise revenue of $8·7 million, assets of $15·2 million and profit before tax of $1·8 million.
You have identified the following issues as a result of your review:
(i) The planned audit approach to trade payables was to place reliance on purchasing controls and keep substantive tests to a minimum. During controls testing on trade payables, from a random statistical sample, the audit team identified three purchase orders which had not been authorised by the procurement manager. On review of the supporting documentation, the audit team concluded that the items were legitimate business purchases and therefore concluded that no additional procedures were required. (4 marks)
(ii) Following a review of petty cash transactions, the audit assistant identified that the petty cashier paid for taxi fares for personal, non-business journeys with a total value of $175. Following discussions with the audit assistant, you have ascertained that he did not report the matter further as the amount is immaterial. The audit assistant also commented that the petty cashier is his brother and that he did not want to get him into trouble. (6 marks)
(iii) Cut-off testing on revenue has identified two goods despatch notes, dated 2 December 2017, for items sent to Chinn Co, with a combined sales value of $17,880 which had been included in revenue for the year ended 30 November 2017. The client’s financial controller, David Mount, has explained that Chinn Co does not order on a regular basis from Davis Co. In the absence of a regular payment history with Chinn Co therefore, and in order to minimise the receivables collection period from this particular customer, the sales invoice is raised and sent to the customer on the same day that the sales order is received. The average time period between the receipt of an order and despatching the goods to the customer is approximately one to two weeks. The audit working papers have concluded that no further investigation is necessary. (6 marks)
(iv) The finance director, Leslie Gray, has not completed the tax computation for the year ended 30 November 2017. He has recently asked the audit assistant to calculate the company’s tax payable for the year on the basis that as a recently qualified chartered certified accountant, the audit assistant was more up to date with recent changes in tax legislation. (4 marks)
Required:
Evaluate the quality control issues and the implications for the completion of the audit including any further actions which should be taken by your audit firm. Your answer should include the matters to be communicated to management and to those charged with governance in relation to the audit of Davis Co.
Note: The split of the mark allocation is shown against each issue described above.
590 人做过
【简答题】
You have received the following email from your manager, Kara Weddell.
From: Kara Weddell
Date: 3 December 2012
To: Tax senior
Subject: Banda Ross
I've put a copy of a letter from a potential new client, Banda Ross, on your desk. I've arranged a meeting with Banda
for Friday this week to discuss the most appropriate structure for her new business, 'Aral'.
I spoke to Banda yesterday and obtained the following additional information.
· Banda has owned the whole of the ordinary share capital of Flores Ltd since 1 January 2009.
· Flores Ltd pays Banda a salary of ￡12,700 per annum and pays dividends to her of ￡20,250 on 31 July each year.
· Banda does not intend to take any income from Aral until the tax year 2015/16 at the earliest.
· Flores Ltd is Banda's only source of income.
Banda also mentioned that Flores Ltd made some sort of 'informal loan' to her in 2009 of ￡21,000 to pay for
improvements to her house. I decided not to press her about this over the phone but I need to discuss with her
what she meant by 'informal' and whether or not the loan has been disclosed to HM Revenue and Customs.
Please prepare the following schedules for me to use as a basis for our discussions. I will give Banda copies of
schedules (a) and (b) but not schedule (c), as some of its contents may be sensitive.
(a) Calculations of the anticipated tax adjusted trading profit/loss of Aral for its first three trading periods.
(b) Explanations, together with relevant supporting calculations, of the tax relief available in respect of the
anticipated trading losses depending on whether the business is run as a sole trader or a limited company.
When considering the use of a limited company, don't forget that it could be owned by Banda or by Flores
Ltd.
Please include a recommendation based on your figures but do not address any other issues regarding the
differences between trading as a sole trader and as a company; I just want to focus on the losses for the
moment.
(c) Explanatory notes of the tax implications of there being a loan from Flores Ltd to Banda and whether or not
such a loan might affect our willingness to provide her with tax advice.
Take some time to think about your approach to this before you start; I want you to avoid preparing any
unnecessary calculations and to keep the schedules brief.
Thank you
Kara
The letter referred to in Kara's email is set out below.
Dear Kara
Aral business
I am the managing director of Flores Ltd, a company that manufactures waterskiing equipment. I am looking for a
tax adviser to help me with my next business venture.
When I began the Flores business in 2007 it was expected to make losses for the first year or so. I was advised not
to form a company but to trade as a sole trader and to offset the losses against my income of earlier years. I
followed that advice and transferred the business to Flores Ltd on 1 January 2009, once it had become profitable.
Flores Ltd has made taxable trading profits of approximately ￡120,000 each year since it was formed. It prepares
accounts to 30 June each year.
For the past few months I have been researching the windsurfing market. I must have spent at least ￡6,000
travelling around the UK visiting retailers and windsurfing clubs (half of which was spent on buying people lunch!).
However, it was all worth while as on 1 January 2013 I intend to start a new business, 'Arar, manufacturing
windsurfing equipment.
The budgeted results for the first three trading periods of the Aral business are set out below:
￡
6 months ending 30 June 2013 Trading loss (12,500)
Year ending 30 June 2014 Trading loss (13,0001)
Year ending 30 June 2015 Trading profit 77,000
The next decision I need to make is whether the new business should trade as a company or as an unincorporated
entity. It would make more sense commercially to form a company immediately but I would be willing to use the
same approach as I used when establishing the Flores business if this maximises the relief obtained in respect of
the trading losses. I want to obtain relief for the losses now; I do not want the losses carried forward for relief in the
future unless there are no other options available.
Yours sincerely
Banda
Required
Prepare the schedules requested by Kara.
Marks are available for the three schedules as follows:
(a) Tax adjusted trading profit/loss of the new business (Aral) for its first three trading periods.
(b) The tax relief available in respect of the anticipated trading losses, together with supporting calculations and
a recommended structure for the business.
(c) Explanatory notes, together with relevant supporting calculations, in connection with the loan.
Additional marks will be awarded for the appropriateness of the format and presentation of the schedules, the
effectiveness with which the information is communicated and the extent to which the schedules are structured in a
logical manner.
Notes:
1 You should assume that the rules, rates and allowances for the tax year 2011/12 and for the Financial Year
to 31 March 2012 apply throughout the question.
2 You should ignore value added tax (VAT).
From: Kara Weddell
Date: 3 December 2012
To: Tax senior
Subject: Banda Ross
I've put a copy of a letter from a potential new client, Banda Ross, on your desk. I've arranged a meeting with Banda
for Friday this week to discuss the most appropriate structure for her new business, 'Aral'.
I spoke to Banda yesterday and obtained the following additional information.
· Banda has owned the whole of the ordinary share capital of Flores Ltd since 1 January 2009.
· Flores Ltd pays Banda a salary of ￡12,700 per annum and pays dividends to her of ￡20,250 on 31 July each year.
· Banda does not intend to take any income from Aral until the tax year 2015/16 at the earliest.
· Flores Ltd is Banda's only source of income.
Banda also mentioned that Flores Ltd made some sort of 'informal loan' to her in 2009 of ￡21,000 to pay for
improvements to her house. I decided not to press her about this over the phone but I need to discuss with her
what she meant by 'informal' and whether or not the loan has been disclosed to HM Revenue and Customs.
Please prepare the following schedules for me to use as a basis for our discussions. I will give Banda copies of
schedules (a) and (b) but not schedule (c), as some of its contents may be sensitive.
(a) Calculations of the anticipated tax adjusted trading profit/loss of Aral for its first three trading periods.
(b) Explanations, together with relevant supporting calculations, of the tax relief available in respect of the
anticipated trading losses depending on whether the business is run as a sole trader or a limited company.
When considering the use of a limited company, don't forget that it could be owned by Banda or by Flores
Ltd.
Please include a recommendation based on your figures but do not address any other issues regarding the
differences between trading as a sole trader and as a company; I just want to focus on the losses for the
moment.
(c) Explanatory notes of the tax implications of there being a loan from Flores Ltd to Banda and whether or not
such a loan might affect our willingness to provide her with tax advice.
Take some time to think about your approach to this before you start; I want you to avoid preparing any
unnecessary calculations and to keep the schedules brief.
Thank you
Kara
The letter referred to in Kara's email is set out below.
Dear Kara
Aral business
I am the managing director of Flores Ltd, a company that manufactures waterskiing equipment. I am looking for a
tax adviser to help me with my next business venture.
When I began the Flores business in 2007 it was expected to make losses for the first year or so. I was advised not
to form a company but to trade as a sole trader and to offset the losses against my income of earlier years. I
followed that advice and transferred the business to Flores Ltd on 1 January 2009, once it had become profitable.
Flores Ltd has made taxable trading profits of approximately ￡120,000 each year since it was formed. It prepares
accounts to 30 June each year.
For the past few months I have been researching the windsurfing market. I must have spent at least ￡6,000
travelling around the UK visiting retailers and windsurfing clubs (half of which was spent on buying people lunch!).
However, it was all worth while as on 1 January 2013 I intend to start a new business, 'Arar, manufacturing
windsurfing equipment.
The budgeted results for the first three trading periods of the Aral business are set out below:
￡
6 months ending 30 June 2013 Trading loss (12,500)
Year ending 30 June 2014 Trading loss (13,0001)
Year ending 30 June 2015 Trading profit 77,000
The next decision I need to make is whether the new business should trade as a company or as an unincorporated
entity. It would make more sense commercially to form a company immediately but I would be willing to use the
same approach as I used when establishing the Flores business if this maximises the relief obtained in respect of
the trading losses. I want to obtain relief for the losses now; I do not want the losses carried forward for relief in the
future unless there are no other options available.
Yours sincerely
Banda
Required
Prepare the schedules requested by Kara.
Marks are available for the three schedules as follows:
(a) Tax adjusted trading profit/loss of the new business (Aral) for its first three trading periods.
(b) The tax relief available in respect of the anticipated trading losses, together with supporting calculations and
a recommended structure for the business.
(c) Explanatory notes, together with relevant supporting calculations, in connection with the loan.
Additional marks will be awarded for the appropriateness of the format and presentation of the schedules, the
effectiveness with which the information is communicated and the extent to which the schedules are structured in a
logical manner.
Notes:
1 You should assume that the rules, rates and allowances for the tax year 2011/12 and for the Financial Year
to 31 March 2012 apply throughout the question.
2 You should ignore value added tax (VAT).
589 人做过
【组合题】3.Nocturne Ltd, a partially exempt company for the purposes of value added tax (VAT), requires advice on the corporation tax implications of providing an asset to one of its shareholders; the income tax implications for another shareholder of making a loan to the company; and simplifying the way in which it accounts for VAT.
Nocturne Ltd:
– Is a UK resident trading company.
– Prepares accounts to 31 March annually and expects to pay corporation tax at the rate of 20%.
– Has four shareholders, each of whom owns 25% of the company’s ordinary share capital.
– Owns a laptop computer, which it purchased in October 2012 for ￡1,200, and which has a current market value of ￡150.
– Has purchased no other plant and machinery for several years and the tax written down value of its main pool at 31 March 2015 was ￡nil.
Provision of a laptop computer to one of Nocturne Ltd’s shareholders:
– Nocturne Ltd is considering two alternative ways of providing a laptop computer in the year ending 31 March 2016 for the personal use of one of its shareholders, Jed.
– Jed is neither a director nor an employee of Nocturne Ltd.
– Option1: Nocturne Ltd will buy a new laptop computer for ￡1,800 and give it immediately to Jed.
– Option 2: Nocturne Ltd will gift its existing laptop to Jed and will purchase a replacement for use in the company for ￡1,800.
Loan from Siglio:
– Siglio will loan ￡60,000 to Nocturne Ltd on 1 October 2015 to facilitate the purchase of new equipment.
– Siglio is both a shareholder of Nocturne Ltd and the company’s managing director.
– Nocturne Ltd will pay interest at a commercial rate on the loan from Siglio.
– Siglio will borrow the full amount of the loan from his bank on normal commercial terms.
VAT – partial exemption:
– Nocturne Ltd is partially exempt for the purposes of VAT.
– Nocturne Ltd’s turnover for the year ended 31 March 2015 was ￡240,000 (VAT exclusive).
– Nocturne Ltd’s turnover for the year as a whole for VAT purposes comprised 86% taxable supplies and 14% exempt supplies.
– The input VAT suffered by Nocturne Ltd on expenditure during the year ended 31 March 2015 was:
564 人做过
【组合题】4.King, a wealthy client of your firm with a significant property portfolio, requires advice on the sale of some unquoted shares and on the capital gains tax and inheritance tax implications of transferring assets to a trust and to his two children.
King:
– Is resident and domiciled in the UK.
– Is an additional rate taxpayer.
– Has used his capital gains tax annual exempt amount for the tax year 2015/16.
– Has made one previous lifetime gift of ￡25,000 to his daughter, Florentyna, on 1 June 2014.
– It should be assumed that King will die on 1 May 2017.
King’s family:
– King’s daughter, Florentyna, is 34 years old and has two young children.
– Florentyna will have income from part-time employment of ￡10,000 in the tax year 2015/16. This is her only source of taxable income.
– King’s son, Axel, is 40 years old and has an 18-year-old daughter, who is a university student.
King’s plans:
– On 1 September 2015, King will sell some of his shares in Wye Ltd.
– On 1 October 2015, King will put a cottage he owns in Newtown and the after-tax cash proceeds from the sale of the shares in Wye Ltd into an interest in possession trust for Florentyna and her children.
– On 1 March 2016, King will gift his share of a flat in Unicity to Axel.
Sale of shares in Wye Ltd:
– Wye Ltd is an unquoted investment company.
– King acquired 5,000 shares in Wye Ltd on 1 June 2002 at a cost of ￡5 each.
– These shares will be worth ￡45 each on 1 September 2015.
– King will sell sufficient shares to generate after-tax proceeds of ￡30,000.
Cottage in Newtown:
– This property is wholly owned by King.
– It is expected to have a value of ￡315,000 on 1 October 2015.
Creation of the interest in possession trust:
– King will pay any inheritance tax arising as a result of the gifts made to the trust.
– Florentyna will be the life tenant and her two young children will be the remaindermen of the trust.
– Florentyna will live in the cottage in Newtown and the trustees will invest the cash in quoted shares which will generate annual dividends of ￡3,000.
Flat in Unicity:
– The flat in Unicity is jointly owned by King and his wife, Joy, in the proportions: King 75% and Joy 25%.
– King and Joy have recently signed a contract with Axel’s daughter to rent the flat to her for three years starting on 1 September 2015.
– The rental agreement is on a commercial basis.
– King has obtained the following expected valuations for the flat as at 1 March 2016
555 人做过
【简答题】
Ernest intends to sell a capital asset on 1 February 2013 and wishes to maximise his after tax sales proceeds He is
also seeking advice on his inheritance tax position and on his will.
The following information has been obtained from a telephone conversation with Ernest and from client files.
Ernest:
- Is 54 years old and unmarried.
- Lives with Georgina, who is 48 years old, and her adult daughter, Eileen.
- Earns a salary of ￡130,000 per year.
- Has as yet made no disposals of capital assets in the tax year 2012/13.
- Intends to sell either an oil painting or 7,700 shares in Neutron Ltd on 1 February 2013
Oil painting:
- Ernest inherited the painting on the death of his uncle on 1 May 2007 when it was worth ￡23,300.
- Ernest's uncle purchased the painting on 1 July 1993 for ￡19,500.
- The painting is expected to be worth ￡47,000 on 1 February 2013.
Shares in Neutron Ltd:
- Qualified for income tax relief under the enterprise investment scheme (EIS) although Ernest did not claim
any relief.
- 1 April 2004 Ernest subscribed for 18,600 shares at ￡8.90 per share.
- 1 March 2006 Ernest received a 1 for 4 bonus issue.
- 1 July 2009 Ernest purchased his full entitlement under a 1 for 10 rights issue at ￡4.20 per share.
- The shares are expected to be worth ￡5 each on 1 February 2013.
Neutron Lid:
- Has an issued share capital of two million ￡1 ordinary shares.
- Is not quoted on any stock exchange.
- Manufactures and distributes radiation measuring equipment.
Inheritance tax planning and wills:
- Neither Ernest nor Georgina have made any lifetime gifts.
- In his will, Ernest has left the whole of his estate to Georgina.
- In her will, Georgina has left the whole of her estate to Eileen.
- Ernest and Georgina wish to minimise their total inheritance tax liability.
- They are willing to make lifetime gifts to each other but not to Eileen or any other person or organisation.
Current market values of assets owned:
Ernest Georgina
￡ ￡
Family home 620,000 -
Antiques and works of art 400,000 60,000
Investment property 380,000 -
Shares in Neutron Ltd 127,875 -
Required
(a) Prepare calculations of the after tax sales proceeds that would be realised on the proposed sale of the
painting and on the proposed sale of the shares on 1 February 2013.
Note: you should assume that Ernest will make any necessary beneficial claims or elections.
(b) Prepare brief notes explaining the inheritance tax liabilities that will arise on the deaths of Ernest and
Georgina if no action is taken to reduce such liabilities; identify any actions that could be taken in order to
reduce these liabilities and explain the inheritance tax and capital gains tax implications of these actions.
Note: you are not required to prepare calculations for part (b) of this question.
Assume that the tax rules and rates for 2011/12 continue to apply in subsequent years.
also seeking advice on his inheritance tax position and on his will.
The following information has been obtained from a telephone conversation with Ernest and from client files.
Ernest:
- Is 54 years old and unmarried.
- Lives with Georgina, who is 48 years old, and her adult daughter, Eileen.
- Earns a salary of ￡130,000 per year.
- Has as yet made no disposals of capital assets in the tax year 2012/13.
- Intends to sell either an oil painting or 7,700 shares in Neutron Ltd on 1 February 2013
Oil painting:
- Ernest inherited the painting on the death of his uncle on 1 May 2007 when it was worth ￡23,300.
- Ernest's uncle purchased the painting on 1 July 1993 for ￡19,500.
- The painting is expected to be worth ￡47,000 on 1 February 2013.
Shares in Neutron Ltd:
- Qualified for income tax relief under the enterprise investment scheme (EIS) although Ernest did not claim
any relief.
- 1 April 2004 Ernest subscribed for 18,600 shares at ￡8.90 per share.
- 1 March 2006 Ernest received a 1 for 4 bonus issue.
- 1 July 2009 Ernest purchased his full entitlement under a 1 for 10 rights issue at ￡4.20 per share.
- The shares are expected to be worth ￡5 each on 1 February 2013.
Neutron Lid:
- Has an issued share capital of two million ￡1 ordinary shares.
- Is not quoted on any stock exchange.
- Manufactures and distributes radiation measuring equipment.
Inheritance tax planning and wills:
- Neither Ernest nor Georgina have made any lifetime gifts.
- In his will, Ernest has left the whole of his estate to Georgina.
- In her will, Georgina has left the whole of her estate to Eileen.
- Ernest and Georgina wish to minimise their total inheritance tax liability.
- They are willing to make lifetime gifts to each other but not to Eileen or any other person or organisation.
Current market values of assets owned:
Ernest Georgina
￡ ￡
Family home 620,000 -
Antiques and works of art 400,000 60,000
Investment property 380,000 -
Shares in Neutron Ltd 127,875 -
Required
(a) Prepare calculations of the after tax sales proceeds that would be realised on the proposed sale of the
painting and on the proposed sale of the shares on 1 February 2013.
Note: you should assume that Ernest will make any necessary beneficial claims or elections.
(b) Prepare brief notes explaining the inheritance tax liabilities that will arise on the deaths of Ernest and
Georgina if no action is taken to reduce such liabilities; identify any actions that could be taken in order to
reduce these liabilities and explain the inheritance tax and capital gains tax implications of these actions.
Note: you are not required to prepare calculations for part (b) of this question.
Assume that the tax rules and rates for 2011/12 continue to apply in subsequent years.
533 人做过
【组合题】
503 人做过
【组合题】Boltzman Machines (Boltzman) is a listed, multinational engineering business. It has two divisions, one manufacturing aerospace parts and the other automotive parts. The company is known for innovation and it allows its managers much autonomy to run their own divisions and projects. There has been recent criticism at a shareholders’ meeting of the executive management for not listening to shareholders’ concerns and allowing this autonomy to run out of control. Therefore, the board at Boltzman have decided to create a framework which brings together all of the initiatives described below.
The chief executive officer (CEO) feels that the performance prism may be a suitable model and has asked you to draft a report to the board to explain the model and how Boltzman’s existing initiatives fit within it.
The initiatives which are running at present are:
1. An analysis of stakeholder influence at Boltzman leading to suitable strategic performance measures.
2. A benchmarking exercise of the performance measures from initiative 1 with Boltzman’s main competitor,General Machines.
3. The introduction of quality initiatives bringing lean production methods to Boltzman.
The CEO also requires your input on each of these initiatives as they are all at various stages of progress:
First, a stakeholder analysis has been completed by one of Boltzman’s managers (in Appendix 1) but she has gone on holiday and has not written up a commentary of her results. Therefore, the CEO wants you to take the information in Appendix 1 and explain the results and evaluate the suggested performance measures. The CEO has asked that you do not, at this stage, suggest long lists of additional indicators.
Second, the CEO wants you to use these suggested measures to benchmark the performance of Boltzman against General Machines. The CEO stated, ‘Make sure that you calculate the measures given in Appendix 1. You should also add two justified measures of your own using the data provided. However, restrict yourself to these seven measures and don’t drown us with detail about individual business units.’ A junior analyst has gathered data to use in the benchmarking exercise in Appendix 2.
Third, the company has stated that one of its strategic aims is to be the highest quality supplier in the market place. In order to achieve this, the head of the aerospace division has already started a project to implement just-in-time (JIT) manufacturing. An extract of his email proposing this change is given in Appendix 3. The CEO feels that there are some important elements hinted at but not developed in this email. In particular, the CEO wants you to explain the problems of moving to JIT manufacturing.
Required:
Prepare a report to the board of Boltzman to:
498 人做过
【简答题】
You have recently been approached by Fred Flop. Fred informs you that he is experiencing problems in dealing with
aspects of his company tax returns. The company accountant has been unable to keep up-to-date with matters, and
Fred also believes that mistakes have been made in the past. Fred needs assistance.
The following information has been extracted from client files and from meetings with the shareholders. Assume
that today's date is 20 May 2013.
Fred Flop:
· 100% shareholder of Flop Limited.
· Managing director.
Flop Limited:
· UK trading company.
· Taxable profits of ￡595,000 in the year ended 31 March 2010.
· Has one wholly owned subsidiary.
· Both companies have a 31 March year-end.
Corporation tax return (CT600) for the year ended 31 March 2011:
· The corporation tax return for this period was not submitted until 2 November 2012, and corporation tax of
￡123,500 was paid at the same time. Taxable total profits were stated as ￡741,800.
· A formal notice (0T203) requiring the company to file a self-assessment corporation tax return (dated
1 February 2012) had been received by the company on 4 February 2012.
Examination of the accounts and tax computation for the year ended 31 March 2011:
· A ￡10,000 repairs provision was made; there is no supporting information.
· ￡46,500 legal and professional fees allowed in full without any explanation. Fred has subsequently produced
the following analysis:
Analysis of legal & professional fees
￡
Legal fees on a failed attempt to secure a trading loan 5,000
Debt collection agency fees 12,800
Obtaining planning consent for building extension 5,700
Accountant's fees for preparing accounts 14,000
Legal fees relating to a trade dispute 9,000
· No enquiry has yet been raised by HMRC.
CT600 for the year ended 31 March 2012:
· Has not been submitted yet.
· Accounts are late and nearing completion, with only one change still to be made.
· A notice requiring the company to file a self-assessment corporation tax return (0T203) dated 27 July 2012
was received on 1 August 2012. No corporation tax has yet been paid.
· Computation currently shows taxable total profits of ￡815,000 before accounting adjustments.
· A company owing Flop Ltd ￡50,000 (excluding VAT) has gone into liquidation, and it is unlikely that any of
this money will be paid. The money has been outstanding since 3 September 2011 (which was also the tax
point for the supply), and the impairment loss (bad debt) will need to be included in the accounts.
· Computer equipment totalling ￡50,000 had been expensed in the accounts. No adjustment has been made in the
tax computation. The annual investment allowance has already been used during the year ended 31 March 2012.
VAT issues:
· VAT return for the quarter ended 31 March 2013 was submitted on 15 May 2013, and VAT of ￡24,000 was
paid at the same time.
· Previous return to 31 December 2012 was also submitted late.
· No account has been made for VAT on the bad debt.
· VAT return for 30 June 2013 may also be late. Estimated VAT liability is ￡8,250.
Required
(a) (i) Calculate the revised corporation tax (CT) payable for the accounting periods ending 31 March 2011
and 2012 respectively. Your answer should include an explanation of the adjustments made as a
result of the information which has now come to light and the practical steps needed to correct the
position.
(ii) State, giving reasons, the due payment date of the corporation tax (CT) and the filing date of the
corporation tax return for each period, and identify any interest and penalties which may have arisen
to date.
Assume that the rates and allowances for Financial Year 2011 apply throughout this part and interest on
overdue tax is 3%.
(b) Explain the consequences of filing the VAT returns late and advise Fred how he should deal with the
underpayment and bad debt for VAT purposes. Your explanation should be supported by relevant
calculations.
aspects of his company tax returns. The company accountant has been unable to keep up-to-date with matters, and
Fred also believes that mistakes have been made in the past. Fred needs assistance.
The following information has been extracted from client files and from meetings with the shareholders. Assume
that today's date is 20 May 2013.
Fred Flop:
· 100% shareholder of Flop Limited.
· Managing director.
Flop Limited:
· UK trading company.
· Taxable profits of ￡595,000 in the year ended 31 March 2010.
· Has one wholly owned subsidiary.
· Both companies have a 31 March year-end.
Corporation tax return (CT600) for the year ended 31 March 2011:
· The corporation tax return for this period was not submitted until 2 November 2012, and corporation tax of
￡123,500 was paid at the same time. Taxable total profits were stated as ￡741,800.
· A formal notice (0T203) requiring the company to file a self-assessment corporation tax return (dated
1 February 2012) had been received by the company on 4 February 2012.
Examination of the accounts and tax computation for the year ended 31 March 2011:
· A ￡10,000 repairs provision was made; there is no supporting information.
· ￡46,500 legal and professional fees allowed in full without any explanation. Fred has subsequently produced
the following analysis:
Analysis of legal & professional fees
￡
Legal fees on a failed attempt to secure a trading loan 5,000
Debt collection agency fees 12,800
Obtaining planning consent for building extension 5,700
Accountant's fees for preparing accounts 14,000
Legal fees relating to a trade dispute 9,000
· No enquiry has yet been raised by HMRC.
CT600 for the year ended 31 March 2012:
· Has not been submitted yet.
· Accounts are late and nearing completion, with only one change still to be made.
· A notice requiring the company to file a self-assessment corporation tax return (0T203) dated 27 July 2012
was received on 1 August 2012. No corporation tax has yet been paid.
· Computation currently shows taxable total profits of ￡815,000 before accounting adjustments.
· A company owing Flop Ltd ￡50,000 (excluding VAT) has gone into liquidation, and it is unlikely that any of
this money will be paid. The money has been outstanding since 3 September 2011 (which was also the tax
point for the supply), and the impairment loss (bad debt) will need to be included in the accounts.
· Computer equipment totalling ￡50,000 had been expensed in the accounts. No adjustment has been made in the
tax computation. The annual investment allowance has already been used during the year ended 31 March 2012.
VAT issues:
· VAT return for the quarter ended 31 March 2013 was submitted on 15 May 2013, and VAT of ￡24,000 was
paid at the same time.
· Previous return to 31 December 2012 was also submitted late.
· No account has been made for VAT on the bad debt.
· VAT return for 30 June 2013 may also be late. Estimated VAT liability is ￡8,250.
Required
(a) (i) Calculate the revised corporation tax (CT) payable for the accounting periods ending 31 March 2011
and 2012 respectively. Your answer should include an explanation of the adjustments made as a
result of the information which has now come to light and the practical steps needed to correct the
position.
(ii) State, giving reasons, the due payment date of the corporation tax (CT) and the filing date of the
corporation tax return for each period, and identify any interest and penalties which may have arisen
to date.
Assume that the rates and allowances for Financial Year 2011 apply throughout this part and interest on
overdue tax is 3%.
(b) Explain the consequences of filing the VAT returns late and advise Fred how he should deal with the
underpayment and bad debt for VAT purposes. Your explanation should be supported by relevant
calculations.
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【组合题】Beeshire Local Authority (BLA) is a local government body which provides a range of services for the area of Beeshire within the country of Seeland. Beeshire is a wealthy area within the country with many tourist attractions. One of BLA’s tasks is to ensure that waste is collected from the homes and businesses in Beeshire. The goal for BLA’s waste management department is ‘to maintain Beeshire as a safe, clean and environmentally friendly place where people and businesses want to both stay in and return to.’ The need for waste collection is linked to public health concerns, the desire to keep the streets clean and attractive and the desire to increase the amount of rubbish which is recycled. BLA is funded through a single local tax and does not charge its residents or businesses separately for most of its services, including waste collection. There is no public or political appetite for outsourcing services such as waste management.
Waste collection is performed by the workforce using a fleet of vehicles. The waste is either taken to recycling plants or else to landfill sites for burying. BLA obtains revenues from all the recycled waste but this only just covers the cost of running the recycling facilities.
Against a background estimate that waste will increase by 1% p.a. in the future, the national government has ordered local authorities, such as BLA, to promote the recycling of waste and has set a target of 40% of all waste to be recycled by 2015. In order to discourage the creation of non-recyclable waste, the government has imposed a levy per tonne of waste buried in landfill sites and has stated that this levy will rise over the next five years in order to encourage continuing improvement in the amount of recycled waste.
Currently, Seeland is in a long recession and so local authority revenues have fallen as tax revenues reflect the poor state of the economy. Along with other local authorities, BLA has tried to cut costs and so has focused on financial measures of performance. In a recent, private meeting, the chief executive of BLA was heard to say ‘keep costs under control and we will worry about quality of service only when complaint levels build to an unacceptable level.’ As one of the area’s largest employers, cutting staff numbers has been very difficult for BLA due to the impact on the local economy and the reaction of the residents.
The current performance indicators used at BLA are drawn from the existing information systems with national figures given for comparison. Those relating to waste collection for the year ending 31 March 2014 are:
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【简答题】
2、You are responsible for performing Engagement Quality Control Reviews on selected audit clients of Crocus & Co, and you are currently performing a review on the audit of the Magnolia Group (the Group). The Group manufactures chemicals which are used in a range of industries, with one of the subsidiaries, Daisy Co, specialising in chemical engineering and developing products to be sold by the other Group companies. The Group’s products sell in over 50 countries.
A group structure is shown below, each of the subsidiaries is wholly owned by Magnolia Co, the parent company of the Group：
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