Series: AUG 2022

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SCS – Aug 2022 – L3 – Q8 – Controlling Risk

Explain the ISO 31000 risk management framework and the OECD principles relevant to Bazar's governance concerns.

Question

The Director of Finance and Operations, Mrs. Emma Owusu-Kwakye, is concerned about the lack of a “standardised risk management system” and “good corporate governance” at Bazar. Following Continuous Professional Development (CPD) training organised recently by the Institute of Chartered Accountants, Ghana (ICAG), on this subject and attended by you as a member of the Finance Team, duly paid for from Bazar’s training budget:

Required:
You have been asked by management to brief your finance team members on the following:

i) The International Standardisation for Organisation (ISO 31000) framework for risk management using the three (3) main elements. (5 marks)
ii) TWO (2) out of the Six OECD principles of Corporate Governance. (5 marks)

Answer

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Tags: Corporate Governance, ISO 31000, OECD principles, Risk Management
Level: Level 3

Topic: Controlling Risk
Series: AUG 2022

SCS – Aug 2022 – L3 – Q7 – Ethics and Social Responsibility

Explanation of remuneration policies in Ghana’s Code of Best Practices and their implications for corporate governance at Bazar.

Question

Remuneration packages should attract individuals to a company and persuade them to work for the company. Ghana’s Code of Best Practices makes three statements about remuneration policy. The Code adds that the remuneration level for individual directors should reflect their experiences and the level of responsibilities they undertake.

Required:
i) Explain the three statements about remuneration as stated in the Ghana’s Code of Best Practices policy to support Bazar management engagement with the General Welfare Committee (GWC). (6 marks)

ii) Explain to the management of Bazar why executive remuneration is a governance issue. (4 marks)

Answer

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Tags: Director Compensation, Executive Remuneration, Governance, Remuneration Policy
Level: Level 3

Topic: Ethics and social responsibility
Series: AUG 2022

SCS – Aug 2022 – L3 – Q6 – Strategy Implementation

Application of Lewin's change model to propose a transformation plan for Bazar's management style from authoritarian to a more open style.

Question

The management style of Bazar is in transition from a somehow authoritarian style described by some managers as almost autocratic and militaristic to a more ‘open’ style that encourages managers and supervisors to seek ideas from staff and to operate in an informal manner.

Required:
Using Lewin’s Model for Managing Change, (unfreeze, change, re-freeze) suggest an approach to introducing planned transformational change in the management style of Bazar.

Answer

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Tags: Change Management, Lewin's Model, Re-freezing, Transformation, Unfreezing
Level: Level 3

Topic: Strategy implementation
Series: AUG 2022

SCS – Aug 2022 – L3 – Q5 – Financial Management

Prepare Little Bee’s financial forecast and calculate its gearing ratios, explaining their significance to Bazar.

Question

Using the additional information presented by AB Consult & Associate to the Director of Finance and Operations, Mrs. Emma Owusu-Kwakye, on 4 August, prepare the following:

i) Little Bee new forecasted Statement of financial performance after the changes that will be discussed at the board meeting on the 5 August 2022. (4 marks)
ii) Calculate the operating gearing, measured as the ratio of the percentage increase in profit before interest and tax divided by the percentage increase in sales. (2 marks)
iii) Calculate the financial gearing, measured as the ratio of the percentage change in total earnings (or EPS) to the percentage increase in profit before interest and tax. (2 marks)
iv) Calculate the Combined gearing, measured as the ratio of the percentage change in total earnings (or EPS) to the percentage increase in sales. (2 marks)
v) Explain the significance of operating gearing and financial gearing to the management of Bazar. (10 marks)

Answer

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Tags: Business Valuation, Combined Gearing, Financial Forecast, Financial Gearing, Operating Gearing
Level: Level 3

Topic: Financial management
Series: AUG 2022

SCS – Aug 2022 – L3 – Q4 – Competitive Advantage

Explains the five primary activities of Porter's value chain and their relevance to Bazar's business processes.

Question

Within an entity, there is a primary value chain and there are support activities (also called secondary value chain). Porter identified five primary value chain activities which can be applied to a retailing company such as Bazar.

Required:
Using the concept of the value chain, explain using a diagram the FIVE (5) primary value chain as explained by Porter to the management of Bazar highlighting their relevance. (10 marks)

Answer

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Tags: Business operations, Porter, Retail Industry, Strategic Success, Value Chain
Level: Level 3

Topic: Competitive Advantage
Series: AUG 2022

SCS – Aug 2022 – L3 – Q3 – Conflicts of interest and ethical conflict resolution

Explains whistleblowing and what an employee should consider before whistleblowing in Bazar.

Question

“Whistleblowing” means reporting suspicions of illegal or improper behaviour to a person in authority.

Required:
In relation to the comments above, explain to the Director of Human Resources and Organisational Culture, Mrs. Raju Asha, the consequences of comments recorded by an employee. Additionally, advise the employee on what he/she should consider before deciding on “blowing the whistle” and the potential difficulties that the staff might encounter.

Answer

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Tags: Corporate Governance, Ethics, Reporting, Unethical Behavior, Whistleblowing
Level: Level 3

Topic: Conflicts of Interest and Ethical Conflict Resolution
Series: AUG 2022

SCS – Aug 2022 – L3 – Q2 – Strategy Implementation

A report detailing the advantages of acquisition and mergers as a growth strategy versus internal development for Bazar.

Question

In discussing the report presented by AB Consult & Associate, the Director of Finance and Operations made a strong point for acquisition and mergers as a growth strategy instead of internal development. She gave her full support to the decision to acquire the 20 stores.

Required:
Write a report detailing the advantages of an acquisition and mergers method of growth instead of an internal development. Conclude your report by explaining why the financial position and financial performance of Bazar will support or not support the decision to acquire the 20 stores.

Answer

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Tags: Acquisitions, Financial strategy, Growth Strategy, Internal Development, Mergers
Level: Level 3

Topic: Strategy implementation
Series: AUG 2022

SCS – Aug 2022 – L3 – Q1b – Strategy implementation

Explanation of four organizational configurations identified by Mintzberg and their relevance in supporting change management at Bazar.

Question

Mintzberg identified six different organizational configurations. Explain to Bazar management FOUR (4) of these organizational configurations suitable to support the change management process highlighting the differences.

Answer

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Tags: Change Management, Mintzberg, Organizational Configurations
Level: Level 3

Topic: Strategy implementation
Series: AUG 2022

SCS – Aug 2022 – L3 – Q1a – Strategy, stakeholders, and mission

Explanation and illustration of Mintzberg’s five organizational building blocks and their relevance to Bazar's organizational structure.

Question

The organisational structure of Bazar is ‘family centric management’ while not interested
in changing the structure any time soon. It is important to recognise that the most suitable
organisation structure depends partly on circumstances and partly on management
preference. An organisation structure can therefore be changed.
Required:
Using the Mintzberg’s five building blocks for organizational configurations, explain and illustrate with a diagram to the management of Bazar, why management needs to review its current organization structure in order to coordinate its business activities and work processes effectively.

Answer

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Tags: Business Processes, Mintzberg, Organizational Coordination, Organizational Structure, Strategic Apex
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: AUG 2022

AA – Aug 2022 – L2 – Q5c – Completion Procedures and Reporting

Distinguishes between Emphasis of Matter and Other Matter paragraphs in the audit report and explains communication requirements.

Question

ISA 706 (Revised): Emphasis of Matter Paragraphs and Other Matter(s) paragraphs in the Independent Auditor’s Report requires that an auditor’s report may include an “emphasis of matter” paragraph and/or an “other matter” paragraph.

Required:
Distinguish between Emphasis of Matter and Other Matter paragraphs, showing clearly requirements of Audit Report and communication with those charged with governance.

Answer

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Tags: Audit report, Communication with Governance, Emphasis of Matter, ISA 706, Other Matter
Level: Level 2

Topic: Completion Procedures and Reporting
Series: AUG 2022

PT – Aug 2022 – L2 – Q5d – Income Tax Liabilities

Explain how gifts received not related to employment or business are taxed under the Income Tax Act.

Question

An individual who is required to furnish the Commissioner-General (CG) with a return in relation to a gift has to do so to enable the CG subject it to appropriate tax.
Required:
Explain the treatment of a gift not received under employment or business.

Answer

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Tags: Business income, Employment Income, Gift tax, Income Tax
Level: Level 2

Topic: Income Tax Liabilities
Series: AUG 2022

PT – Aug 2022 – L2 – Q5c – Taxation of Capital Gains

Compute the capital gains tax on shares sold by Fortune in 2020.

Question

Fortune acquired shares in Obolo Company Ltd, a manufacturing company situated in Nsawam, and the following transactions took place:
i) He acquired 100,000 ordinary shares for GH¢115,600 on 14 March, 2020. He also acquired another 220,000 shares on 26 November, 2020 at a price of GH¢1.2 per share.
ii) On 24 December, 2020, he sold 235,000 shares for GH¢305,500 which attracted a sales commission of 1.5% of the sales value to the brokerage firm.
Required:
Compute the capital gains tax.

Answer

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Tags: Brokerage Fees, Capital Gains, Investment, Shares, Taxable Gains
Level: Level 2

Topic: Taxation of Capital Gains
Series: AUG 2022

PT – Aug 2022 – L2 – Q5b – Withholding Tax Administration

Explain two circumstances where withholding taxes are exempt.

Question

Explain TWO (2) circumstances under which withholding taxes are exempt.

Answer

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Tags: Corporate Tax, Tax Exemptions, Tax law, Withholding Tax
Level: Level 2

Topic: Withholding Tax Administration
Series: AUG 2022

PT – Aug 2022 – L2 – Q5a – Corporate Tax Liabilities

Compute the branch profit tax for Chahuncha Ghana Branch for the year of assessment 2020.

Question

Chahuncha Ghana Branch declares a profit before tax of GH¢6,000,000 in 2020 year of assessment after charging depreciation of GH¢680,000 and a loss of GH¢1,500,000 which was incurred in 2012. The capital allowance for the year amounted to GH¢750,000, yet to be adjusted. The corporate tax rate is 25%.
Required:
Compute the Branch Profit Tax for the 2020 year of assessment.

Answer

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Tags: Branch profit tax, Corporate Tax, Depreciation, Loss carry forward
Level: Level 2

Topic: Corporate Tax Liabilities
Series: AUG 2022

PT – Aug 2022 – L2 – Q4b – Corporate Tax Liabilities

Explain what constitutes domestic and excluded expenditure under the Income Tax Act, 2015 (Act 896)

Question

According to Act 896, the Commissioner-General shall not allow a deduction in respect of domestic expenditure and excluded expenditure incurred by a person.
Required:
Explain what constitutes domestic expenditure and excluded expenditure in line with the provisions in the Income Tax Act, 2015 (Act 896). (10 marks)

Answer

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Tags: Domestic expenditure, Excluded Expenditure, Income Tax Act, Tax deduction
Level: Level 2

Topic: Corporate Tax Liabilities
Series: AUG 2022

PT – Aug 2022 – L2 – Q4a – Corporate Tax Liabilities

Discuss when an expenditure qualifies as a deductible expense under the Income Tax Act.

Question

For an expenditure to be an allowable deduction, there must be a direct connection between the expenditure and the business.
Required:
Discuss this statement in line with the provisions of the Income Tax Act, 2015 (Act 896).

Answer

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Tags: Allowable Deduction, Business Expenses, Income Tax Act, Tax law
Level: Level 2

Topic: Corporate Tax Liabilities
Series: AUG 2022

PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities

Compute the chargeable incoPartnership Income, Chargeable Income, Capital Allowanceme for three partners for the years 2018, 2019, and 2020.

Question

Elorm and Eyram entered into a partnership on 1 January 2018 to produce hair products. They agreed to share profit and losses equally after charging:

Annual Salaries: Elorm: GH¢10,000,000, Eyram: GH¢14,000,000.
Interest on capital of 5% p.a. was deducted from the profit.
Depreciation deducted from the profits for the various years of assessment were GH¢80,000 (2018), GH¢60,000 (2019), and GH¢180,000 (2020).
Capital contributed by the partners: Elorm: GH¢100,000,000, Eyram: GH¢80,000,000.
To introduce a new product, they invited Elinam to join the partnership on 1 January 2019. Elinam was to receive a salary of GH¢6,000,000 annually in addition to an equal share of profit. He will not be entitled to interest on his capital of GH¢60,000,000.
Elorm resigned as a partner on 30 June 2020 after being elected as a Member of Parliament.
Operational profit/loss of the partnership: GH¢500,000,000 (2018), GH¢(180,000,000) (2019), GH¢1,000,000,000 (2020).
Capital allowance of GH¢60,000 has been granted by Ghana Revenue Authority for each year of assessment.

Required:
Compute the chargeable income of Elorm, Eyram, and Elinam for the 2018, 2019, and 2020 years of assessment. (14 marks)

Answer

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Tags: Capital Allowance, chargeable income, Partnership Income
Level: Level 2

Topic: Income Tax Liabilities
Series: AUG 2022

PT – Aug 2022 – L2 – Q3a – Income Tax Liabilities

Determine the total tax liability for an employee's bonus and salary in 2019.

Question

Yamutu was employed by Yazo Company Ltd on 1 June 2016 with an annual basic salary of GH¢400,000. She was paid a bonus of GH¢240,000 in 2019.
Required:
Determine the tax on bonus and total tax liability of Yamutu in 2019.

Answer

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Tags: Bonus Taxation, Employee Income, Income Tax, Salary Calculation
Level: Level 2

Topic: Income Tax Liabilities
Series: AUG 2022

PT – Aug 2022 – L2 – Q2c – Tax Administration

Explain the contribution rates and their distribution between the employer and employee under the 3-Tier Pension Scheme.

Question

What are the contribution rates and how are they distributed between the Employer and Employee, under the 3-Tier Scheme? (5 marks)

Answer

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Tags: 3-Tier System, Employee Contributions, Employer Contributions, Pension Scheme
Level: Level 2

Topic: Tax Administration
Series: AUG 2022

PT – Aug 2022 – L2 – Q2b – Value-Added Tax (VAT), Customs, and Excise Duties

List three conditions under which a taxable person can deduct input tax without an invoice.

Question

Where a taxable person does not have a tax invoice that provides evidence of the input tax paid, the Commissioner-General may allow a deductible input tax in the tax period in which the deduction arises to a taxable person under certain conditions.
Required:
State THREE (3) conditions that must be satisfied before a taxable person without a tax invoice may be allowed an input tax deduction. (6 marks)

Answer

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Tags: Commissioner-General, Tax deduction, Tax Invoice, VAT Input Tax
Level: Level 2

Topic: Value-Added Tax (VAT), Customs, and Excise Duties
Series: AUG 2022

Series: AUG 2022

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SCS – Aug 2022 – L3 – Q8 – Controlling Risk

Explain the ISO 31000 risk management framework and the OECD principles relevant to Bazar's governance concerns.

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SCS – Aug 2022 – L3 – Q7 – Ethics and Social Responsibility

Explanation of remuneration policies in Ghana’s Code of Best Practices and their implications for corporate governance at Bazar.

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SCS – Aug 2022 – L3 – Q6 – Strategy Implementation

Application of Lewin's change model to propose a transformation plan for Bazar's management style from authoritarian to a more open style.

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SCS – Aug 2022 – L3 – Q5 – Financial Management

Prepare Little Bee’s financial forecast and calculate its gearing ratios, explaining their significance to Bazar.

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SCS – Aug 2022 – L3 – Q4 – Competitive Advantage

Explains the five primary activities of Porter's value chain and their relevance to Bazar's business processes.

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SCS – Aug 2022 – L3 – Q3 – Conflicts of interest and ethical conflict resolution

Explains whistleblowing and what an employee should consider before whistleblowing in Bazar.

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SCS – Aug 2022 – L3 – Q2 – Strategy Implementation

A report detailing the advantages of acquisition and mergers as a growth strategy versus internal development for Bazar.

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SCS – Aug 2022 – L3 – Q1b – Strategy implementation

Explanation of four organizational configurations identified by Mintzberg and their relevance in supporting change management at Bazar.

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SCS – Aug 2022 – L3 – Q1a – Strategy, stakeholders, and mission

Explanation and illustration of Mintzberg’s five organizational building blocks and their relevance to Bazar's organizational structure.

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AA – Aug 2022 – L2 – Q5c – Completion Procedures and Reporting

Distinguishes between Emphasis of Matter and Other Matter paragraphs in the audit report and explains communication requirements.

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PT – Aug 2022 – L2 – Q5d – Income Tax Liabilities

Explain how gifts received not related to employment or business are taxed under the Income Tax Act.

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PT – Aug 2022 – L2 – Q5c – Taxation of Capital Gains

Compute the capital gains tax on shares sold by Fortune in 2020.

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PT – Aug 2022 – L2 – Q5b – Withholding Tax Administration

Explain two circumstances where withholding taxes are exempt.

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PT – Aug 2022 – L2 – Q5a – Corporate Tax Liabilities

Compute the branch profit tax for Chahuncha Ghana Branch for the year of assessment 2020.

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PT – Aug 2022 – L2 – Q4b – Corporate Tax Liabilities

Explain what constitutes domestic and excluded expenditure under the Income Tax Act, 2015 (Act 896)

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PT – Aug 2022 – L2 – Q4a – Corporate Tax Liabilities

Discuss when an expenditure qualifies as a deductible expense under the Income Tax Act.

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PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities

Compute the chargeable incoPartnership Income, Chargeable Income, Capital Allowanceme for three partners for the years 2018, 2019, and 2020.

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PT – Aug 2022 – L2 – Q3a – Income Tax Liabilities

Determine the total tax liability for an employee's bonus and salary in 2019.

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PT – Aug 2022 – L2 – Q2c – Tax Administration

Explain the contribution rates and their distribution between the employer and employee under the 3-Tier Pension Scheme.

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PT – Aug 2022 – L2 – Q2b – Value-Added Tax (VAT), Customs, and Excise Duties

List three conditions under which a taxable person can deduct input tax without an invoice.

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