Tax Audit – NBC Institute

AT – Nov 2023 – L3 – SC – Q5 – Tax Administration and Dispute Resolution

Steps and objectives in handling a tax audit with FIRS and the required documentation.

Question

Zola Nigeria Limited has been in business for several years, preparing its accounts to December 31 of every year. Prior to the last two years, the company had a very good relationship with the Federal Inland Revenue Service (FIRS) as far as prompt filing of annual tax returns and payment of tax liabilities are concerned. The company was, however, fined for late filing of returns in the last financial year ended December 31, 2020.

In compliance with the provisions of the Companies Income Tax Act Cap C21 LFN 2004 (as amended), the company filed its annual returns for the 2022 assessment year (year ended December 31, 2021) within the statutory period. Payment of tax due was also made.

The review done by the tax officials at the FIRS on the tax returns filed by the company necessitated the request for additional relevant documents to authenticate some items of expenditure and capital allowances claimed. The FIRS subsequently wrote a letter to the company for the submission of the documents within two weeks of the receipt of the letter. The receipt of the letter was acknowledged by the company, but it, however, failed to forward the required documents to the tax authorities. A reminder was sent to the company four weeks after the first letter was written, yet it failed to respond to the request made.

The Managing Director of the company has just received a letter from the tax office that a team of tax inspectors will be visiting the company in a fortnight to conduct a tax audit.

The company has approached your firm of chartered accountants to assist with advice on how the company should handle the forthcoming tax audit.

Required:

Your Principal Partner has directed you, as a newly employed Audit Senior, to handle the engagement and expects you to prepare a report for his review before sending the same to the client. The report should address the following:

a. Objectives of tax audits (5 Marks)

b. Stages in a typical tax audit process (4 Marks)

c. Schedule of requirements for FIRS tax audit (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Process, Audit Stages, Corporate Taxation, Dispute Resolution, Financial Reporting, FIRS Requirements, Nigerian Tax System, Tax Audit, Tax Compliance
Level: Level 3

Topic: Tax Administration and Dispute Resolution
Series: NOV 2023

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

Question

HUSNA Nigeria Limited was incorporated on May 13, 2015, to manufacture adhesives using gum arabic. The company, led by Mr. Onyeocha Ben, sought to benefit from the Industrial Development (Income Tax Relief) Act. They applied and were granted a Pioneer Certificate, with the production day certified as July 1, 2015.

The company’s financial records provide the following data:

(i) Accumulated profit as of June 30, 2016 – ₦41,250,000
(ii) Capital expenditure during the Pioneer period (certified by FIRS):

Building – ₦20,000,000
Property, Plant & Equipment – ₦18,750,000
Motor vehicles – ₦12,500,000
Furniture & Fittings – ₦6,250,000

(iii) Adjusted profits from the new trade after the pioneer period:

For 6 months to December 31, 2016 – ₦15,000,000
For the year to December 31, 2017 – ₦22,500,000

Required:
a. Explain briefly the conditions for granting a Pioneer Status to a company.
b. Compute the tax liabilities of the company for the relevant assessment years.
c. Differentiate between Tax Audit and Tax Investigation.

Answer

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Tags: Pioneer Status, Tax Audit, Tax computation, Tax Investigation, Tax liabilities
Level: Level 3

Topic: Taxation of Companies
Series: NOV 2017

TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations

Required to prepare tax documentation and compute liabilities for BICCI Nigeria Limited in response to FIRS tax audit report.

Question

You have been invited to make a presentation to the Board of Directors of BICCI Nigeria Limited. Your performance at the presentation will determine your appointment as the Tax Consultant to the company.

BICCI Nigeria Limited, a trading company, was incorporated on 2 March 2009. It commenced business on 2 October of the same year, making accounts up to 30 September annually. The shareholders invested N18 million in non-current assets before the company commenced business in 2009.

Other information provided:

Authorized, Issued, and Fully Paid-Up Capital – N10 million.
Value Added Tax (VAT) and Withholding Tax (WHT) returns filed for 2010–2013 were carried out 2 months after each transaction month.
Companies Income Tax (CIT) and Tertiary Education Tax (TET) returns were filed on 30 June for the 2011 to 2014 Assessment Years.

Extracts from the accounts (2010–2013):

On 15 July 2014, FIRS inspectors visited BICCI, informing management of an upcoming tax audit on 25 August 2014. They requested the following documents:

Audited Accounts (2010–2013)
Bank Statements (2010–2013)
Trial Balance for each year
Evidence of Tax Returns filed (CIT, VAT, WHT, TET)
General Ledger printouts
Proof of tax payments
Tax registration evidence
Tax Clearance Certificates
WHT Credit Notes, if any

FIRS Interim Tax Audit Report (summarized):

Item	2013	2012	2011	2010
Revenue (N’000)	25,320	21,522	13,989	7,694
VAT on Revenue	8,862	7,533	4,896	3,462
Undisclosed Revenue	16,458	13,989	9,093	4,232
Directors’ Current Account	19,578	21,228	19,250	18,000
Payments under WHT:
– Directors’ Fees	1,625	2,125	1,145	960
– Rent	3,500	3,500	2,625	2,625
– Professional Fees	1,200	1,200	950	950
– Commission	2,825	1,875	970	376

Additional Adjustments:

Cost of Sales written back: 60%
Selling & Distribution expenses written back: 60%
Admin expenses written back: 60%

Requirements:

a. List the documents required by FIRS for the Interim Tax Audit. (3 Marks)
b. Calculate BICCI Nigeria Limited’s potential tax liabilities per the Interim Tax Audit. (12 Marks)
c. Prepare a schedule for VAT and WHT receipts collected by BICCI. (7 Marks)
d. Advise management on possible tax consequences if they do not respond to the audit. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Compliance, Deferred Tax, Financial Statements, Tax Audit, Tax Liability, VAT, WHT
Level: Level 2

Topic: Tax Audits and Investigations
Series: MAY 2015

PT – July 2023 – L2 – Q1c – Tax Administration

Explanation of self-assessment, pre-emptive assessment, administrative assessment, and tax audit assessment.

Question

Explain the following as used in tax administration:
i) Self-Assessment
ii) Pre-emptive Assessment
iii) Administrative Assessment
iv) Tax Audit Assessment

(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Administrative Assessment, Pre-Emptive Assessment, Self Assessment., Tax Assessment, Tax Audit
Level: Level 2

Topic: Tax Administration
Series: JULY 2023

TX – May 2019 – L3 – Q4B – International taxation

Identify the factors considered by the Commissioner-General in selecting a person for a tax audit.

Question

b) The Commissioner-General may, in the exercise of his powers, audit the tax affairs of a person.

Required:
Identify THREE (3) factors considered for selecting a person for audit. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Selection, Commissioner-General, Compliance, Ghana Revenue Authority, Tax Audit
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

AT – Nov 2023 – L3 – SC – Q5 – Tax Administration and Dispute Resolution

Steps and objectives in handling a tax audit with FIRS and the required documentation.

Question

The Managing Director of the company has just received a letter from the tax office that a team of tax inspectors will be visiting the company in a fortnight to conduct a tax audit.

The company has approached your firm of chartered accountants to assist with advice on how the company should handle the forthcoming tax audit.

Required:

a. Objectives of tax audits (5 Marks)

b. Stages in a typical tax audit process (4 Marks)

c. Schedule of requirements for FIRS tax audit (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Process, Audit Stages, Corporate Taxation, Dispute Resolution, Financial Reporting, FIRS Requirements, Nigerian Tax System, Tax Audit, Tax Compliance
Level: Level 3

Topic: Tax Administration and Dispute Resolution
Series: NOV 2023

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

Question

The company’s financial records provide the following data:

(i) Accumulated profit as of June 30, 2016 – ₦41,250,000
(ii) Capital expenditure during the Pioneer period (certified by FIRS):

Building – ₦20,000,000
Property, Plant & Equipment – ₦18,750,000
Motor vehicles – ₦12,500,000
Furniture & Fittings – ₦6,250,000

(iii) Adjusted profits from the new trade after the pioneer period:

For 6 months to December 31, 2016 – ₦15,000,000
For the year to December 31, 2017 – ₦22,500,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Pioneer Status, Tax Audit, Tax computation, Tax Investigation, Tax liabilities
Level: Level 3

Topic: Taxation of Companies
Series: NOV 2017

TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations

Required to prepare tax documentation and compute liabilities for BICCI Nigeria Limited in response to FIRS tax audit report.

Question

Other information provided:

Authorized, Issued, and Fully Paid-Up Capital – N10 million.
Value Added Tax (VAT) and Withholding Tax (WHT) returns filed for 2010–2013 were carried out 2 months after each transaction month.
Companies Income Tax (CIT) and Tertiary Education Tax (TET) returns were filed on 30 June for the 2011 to 2014 Assessment Years.

Extracts from the accounts (2010–2013):

On 15 July 2014, FIRS inspectors visited BICCI, informing management of an upcoming tax audit on 25 August 2014. They requested the following documents:

Audited Accounts (2010–2013)
Bank Statements (2010–2013)
Trial Balance for each year
Evidence of Tax Returns filed (CIT, VAT, WHT, TET)
General Ledger printouts
Proof of tax payments
Tax registration evidence
Tax Clearance Certificates
WHT Credit Notes, if any

FIRS Interim Tax Audit Report (summarized):

Item	2013	2012	2011	2010
Revenue (N’000)	25,320	21,522	13,989	7,694
VAT on Revenue	8,862	7,533	4,896	3,462
Undisclosed Revenue	16,458	13,989	9,093	4,232
Directors’ Current Account	19,578	21,228	19,250	18,000
Payments under WHT:
– Directors’ Fees	1,625	2,125	1,145	960
– Rent	3,500	3,500	2,625	2,625
– Professional Fees	1,200	1,200	950	950
– Commission	2,825	1,875	970	376

Additional Adjustments:

Cost of Sales written back: 60%
Selling & Distribution expenses written back: 60%
Admin expenses written back: 60%

Requirements:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Compliance, Deferred Tax, Financial Statements, Tax Audit, Tax Liability, VAT, WHT
Level: Level 2

Topic: Tax Audits and Investigations
Series: MAY 2015

PT – July 2023 – L2 – Q1c – Tax Administration

Explanation of self-assessment, pre-emptive assessment, administrative assessment, and tax audit assessment.

Question

Explain the following as used in tax administration:
i) Self-Assessment
ii) Pre-emptive Assessment
iii) Administrative Assessment
iv) Tax Audit Assessment

(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Administrative Assessment, Pre-Emptive Assessment, Self Assessment., Tax Assessment, Tax Audit
Level: Level 2

Topic: Tax Administration
Series: JULY 2023

TX – May 2019 – L3 – Q4B – International taxation

Identify the factors considered by the Commissioner-General in selecting a person for a tax audit.

Question

b) The Commissioner-General may, in the exercise of his powers, audit the tax affairs of a person.

Required:
Identify THREE (3) factors considered for selecting a person for audit. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Selection, Commissioner-General, Compliance, Ghana Revenue Authority, Tax Audit
Level: Level 3

Topic: Tax administration in Ghana
Series: MAY 2019

Question Tag: Tax Audit

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AT – Nov 2023 – L3 – SC – Q5 – Tax Administration and Dispute Resolution

Steps and objectives in handling a tax audit with FIRS and the required documentation.

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations

Required to prepare tax documentation and compute liabilities for BICCI Nigeria Limited in response to FIRS tax audit report.

PT – July 2023 – L2 – Q1c – Tax Administration

Explanation of self-assessment, pre-emptive assessment, administrative assessment, and tax audit assessment.

TX – May 2019 – L3 – Q4B – International taxation

Identify the factors considered by the Commissioner-General in selecting a person for a tax audit.

AT – Nov 2023 – L3 – SC – Q5 – Tax Administration and Dispute Resolution

Steps and objectives in handling a tax audit with FIRS and the required documentation.

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations

Required to prepare tax documentation and compute liabilities for BICCI Nigeria Limited in response to FIRS tax audit report.

PT – July 2023 – L2 – Q1c – Tax Administration

Explanation of self-assessment, pre-emptive assessment, administrative assessment, and tax audit assessment.

TX – May 2019 – L3 – Q4B – International taxation

Identify the factors considered by the Commissioner-General in selecting a person for a tax audit.

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AT – Nov 2023 – L3 – SC – Q5 – Tax Administration and Dispute Resolution

Steps and objectives in handling a tax audit with FIRS and the required documentation.

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AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

You're reporting an error for "AT – Nov 2017 – L3 – Q1 – Taxation of Companies"

TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations

Required to prepare tax documentation and compute liabilities for BICCI Nigeria Limited in response to FIRS tax audit report.

You're reporting an error for "TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations"

PT – July 2023 – L2 – Q1c – Tax Administration

Explanation of self-assessment, pre-emptive assessment, administrative assessment, and tax audit assessment.

You're reporting an error for "PT – July 2023 – L2 – Q1c – Tax Administration"

TX – May 2019 – L3 – Q4B – International taxation

Identify the factors considered by the Commissioner-General in selecting a person for a tax audit.

You're reporting an error for "TX – May 2019 – L3 – Q4B – International taxation"

AT – Nov 2023 – L3 – SC – Q5 – Tax Administration and Dispute Resolution

Steps and objectives in handling a tax audit with FIRS and the required documentation.

You're reporting an error for "AT – Nov 2023 – L3 – SC – Q5 – Tax Administration and Dispute Resolution"

AT – Nov 2017 – L3 – Q1 – Taxation of Companies

Explain conditions for pioneer status and compute tax for HUSNA Ltd.

You're reporting an error for "AT – Nov 2017 – L3 – Q1 – Taxation of Companies"

TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations

Required to prepare tax documentation and compute liabilities for BICCI Nigeria Limited in response to FIRS tax audit report.

You're reporting an error for "TAX – May 2015 – L2 – SA – Q1 – Tax Audits and Investigations"

PT – July 2023 – L2 – Q1c – Tax Administration

Explanation of self-assessment, pre-emptive assessment, administrative assessment, and tax audit assessment.

You're reporting an error for "PT – July 2023 – L2 – Q1c – Tax Administration"

TX – May 2019 – L3 – Q4B – International taxation

Identify the factors considered by the Commissioner-General in selecting a person for a tax audit.

You're reporting an error for "TX – May 2019 – L3 – Q4B – International taxation"

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