Series: MAR 2024

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SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

Question

Prestige’s Board acknowledges that by adopting and implementing the highest standards of
corporate governance, this sets the standards and values for the entire Company. The
Company seeks to comply with best practice in all areas of corporate governance and
continues to review the Company’s procedures to maintain proper control and
accountability.
Required

There are nine members on Prestige’s Board of Directors. They include the Chairman, Chief Executive, three executive directors, and four non-executive directors (NEDs). Describe and explain four broad roles for NEDs identified in the document published in the UK in 2003, known as the Higgs Guidance.

Answer

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Tags: Accountability, board roles, Corporate Governance, Non-Executive Directors
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

SCS – MAR 2024 – L3 – Q6b – Strategy, stakeholders, and mission

Explain how Principles V and VI of the OECD Principles of Corporate Governance could be applied at Prestige.

Question

Describe and explain how Principles V and VI of the OECD Principles of Corporate Governance – 2015 Edition, could be applied at Prestige to ensure good corporate governance practices.

Answer

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Tags: Accountability, Corporate Governance, OECD principles, Transparency
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

SCS – MAR 2024 – L3 – Q6a – Strategy, stakeholders, and mission

Describe and explain 5 key issues in corporate governance for Prestige.

Question

Prestige’s Board acknowledges that by adopting and implementing the highest standards of corporate governance, this sets the standards and values for the entire Company. The Company seeks to comply with best practices in all areas of corporate governance and continues to review its procedures to maintain proper control and accountability.

Required:
Describe and explain five key issues in corporate governance that would establish how well or badly Prestige is governed.

Answer

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Tags: Accountability, Board Structure, Corporate Governance, Transparency
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

SCS – MAR 2024 – L3 – Q5c – International financial management

Evaluate the factors restricting foreign investment despite potential good returns.

Question

With reference to Option Three, evaluate the factors that restrict foreign investment despite the perceived potential for good returns.

Answer

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Tags: Barriers, Foreign Investment, international markets, Risk Assessment
Level: Level 3

Topic: International financial management
Series: MAR 2024

SCS – MAR 2024 – L3 – Q5b – Financial management

Calculate the effective rate of borrowing for three months and explain the advantages of convertible bonds.

Question

With reference to Option Two:

i) What would be its effective rate of borrowing for the three months if US dollar LIBOR is 4.50% at the start of the notional interest period for the FRA? (2 marks)
ii) What are the advantages of Convertible Bonds? (3 marks)

Answer

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Tags: Borrowing rate, Convertible Bonds, Financing, FRA
Level: Level 3

Topic: Financial management
Series: MAR 2024

SCS – MAR 2024 – L3 – Q5a – Financial management

Calculate various financial ratios including ROCE, EPS, DPS, and TSR based on given financial data.

Question

With reference to the information in Option One available to Prestige as presented by Professor Joseph Laing, a business consultant, calculate the following:

i) Return on Capital Employed (ROCE) (1 mark)
ii) Earnings Per Share (EPS) (1 mark)
iii) Dividend Per Share (DPS) (2 marks)
iv) Total Shareholders Return (TSR) (2 marks)
v) Explain the difference between ROCE and Accounting Rate of Return, their essential features, and relationship (4 marks)

Answer

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Tags: DPS, EPS, Financial Ratios, ROCE, TSR
Level: Level 3

Topic: Financial management
Series: MAR 2024

SCS – MAR 2024 – L3 – Q4b – Strategy implementation

Advise on an appropriate HR strategy to harmonize the organizational structure for effective delivery at Prestige.

Question

Each company acquired or merged by Prestige was allowed to maintain its human resource structure.

Required:
Analyze and advise on an appropriate HR strategy Prestige should adopt to harmonize the organizational structure for effective delivery of the company’s objectives.

Answer

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Tags: HR Strategy, Mergers and Acquisitions, Organizational Structure, workforce planning
Level: Level 3

Topic: Strategy implementation
Series: MAR 2024

SCS – MAR 2024 – L3 – Q4a – Strategy implementation

Explain how Prestige could leverage ICT using the four broad stages of e-business development to compete.

Question

Prestige’s Board has shifted from their long-standing reluctance to venture into foreign markets to seriously consider the possibility of expansion overseas. An important implication of this decision is that as the size of the market increases, competition becomes international. The main rivals are no longer local suppliers to a domestic market.

Required:
Using the four broad stages of development to a full e-business model, explain how Prestige could leverage ICT to compete.

Answer

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Tags: Business model, Competitive Advantage, E-Business, ICT
Level: Level 3

Topic: Strategy implementation
Series: MAR 2024

SCS – MAR 2024 – L3 – Q3 – Functional strategies

Explain the potential benefits of resource sharing through common IT systems at Prestige.

Question

When five years ago the present regional divisional structure of Greater Accra, Ashanti, and Eastern was formalized, an attempt was made to ensure that common systems and ways of working were adopted across each of the three regions. However, due to the pressures on the Company, this was never fully implemented.

Required:
Explain the potential benefits of resource sharing (configuring an organization’s computing system in such a way that the information and resources within it can be accessed, and remotely accessed, across multiple administrative domains) to Prestige if they adopt common IT systems.

Answer

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Tags: Cost savings, IT Systems, remote access, resource sharing
Level: Level 3

Topic: Functional strategies
Series: MAR 2024

SCS – MAR 2024 – L3 – Q2 – Competitive advantage

Apply and appraise Porter’s three strategies for sustaining competitive advantage for Prestige Designers Ltd.

Question

A strategic clock can be used to consider different business strategies for gaining competitive advantage, based on providing a combination of price and perceived benefits. Porter has suggested three strategies for sustaining competitive advantage over rival firms and their products or services. They are a cost leadership strategy, a differentiation strategy, and a focus strategy.

Required:
Apply and appraise how effective the suggested three strategies for sustaining competitive advantage over rival firms would be useful to Prestige. (10 marks)

Answer

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Tags: Competitive Advantage, cost leadership, Differentiation, focus strategy
Level: Level 3

Topic: Competitive Advantage
Series: MAR 2024

AT – Mar 2024 – L3 – Q3c – Anti-avoidance measures

Explaining the difference between tax avoidance and tax evasion, examples of both, and limitations to tax planning.

Question

According to the Organisation for Economic Co-operation and Development (OECD), tax avoidance and tax evasion are terms which are difficult to define but are generally used to describe the arrangement of a taxpayer’s affairs intended to reduce their tax liability.

Required:

i) Explain the differences between tax avoidance and tax evasion.
(3 marks)

ii) Enumerate THREE (3) examples of tax avoidance activities firms and individuals are likely to engage in.
(3 marks)

iii) Identify FOUR (4) examples of activities that are likely to be classified as tax evasion and not tax avoidance.
(2 marks)

iv) Explain TWO (2) limitations to effective tax planning.
(2 marks)

Answer

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Tags: Illegality, Legal, Tax avoidance, Tax Compliance, Tax Evasion, Tax liabilities
Level: Level 3

Topic: Anti-avoidance measures
Series: MAR 2024

AT – Mar 2024 – L3 – Q3b – International taxation

Explaining the difference between economic and juridical double taxation.

Question

The Organisation for Economic Co-operation and Development (OECD) describes two kinds of double taxation agreements: economic and juridical.

Required:
Explain economic and juridical double taxation.

Answer

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Level: Level 3

Topic: International taxation
Series: MAR 2024

AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax

Discussing the tax implications of providing an asset to a company as capital or loan contribution.

Question

Agogo Ghana Ltd is a manufacturing entity in Ghana. Mr. Konto, a citizen and resident of Malaysia, owns 80% of the company’s shares. Mrs. Konto, a citizen and resident of Malaysia and wife of Mr. Konto, also owns 15% of the shares of the company. Mr. Bawa, the son of Mr. Konto, holds the remaining 5% of the shares in the company. As of 1st June 2023, the company had a share capital of GH¢400,000. A report submitted by the management to the Board of Directors indicated that the company needs to acquire a plant valued at GH¢1,000,000 to enable the company to increase its production capacity. Mr. Konto, who is the majority shareholder, has offered to finance the purchase of the plant for the company but is unsure whether to provide the plant as a loan or as capital.

Required:
Advise Mr. Konto on the income tax treatment of providing the asset to the company as capital or loan contribution.

Answer

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Tags: Capital financing, Dividend taxation, Loan financing, Thin Capitalization
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAR 2024

AT – Mar 2024 – L3 – Q2c – Business income – Corporate income tax

Evaluating the tax benefits of manufacturing ceramics using local and foreign materials versus importing finished ceramics.

Question

Talantula Ltd has engaged you as an ICAG final level candidate on the options that would provide enormous benefits to them and also to the government. The two options are:

To manufacture ceramics using both local and foreign materials. The products will be sold locally and on the international market.
To import finished ceramics for sale in Ghana.

Required:
Evaluate FIVE (5) tax benefits of either of the business options you will want them to associate with over the other.

Answer

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Tags: Corporate Tax, Importation, Locational incentives, Manufacturing, Tax Benefits
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAR 2024

AT – Mar 2024 – L3 – Q2b – Tax administration in Ghana

Identifying categories of persons benefiting from locational tax policies and their respective tax benefits.

Question

Location of certain businesses creates value addition to owners of businesses. In light of the government agenda to accelerate development across certain geographical locations, tax policies are often used to create that drive in response to the 1992 Constitution that requires balanced growth of the country.

Required:
Identify THREE (3) categories of persons that stand to benefit from locational incentives and state their respective benefits.

Answer

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Tags: Agro Processing, Farming, Locational tax benefits, Tax rebates
Level: Level 3

Topic: Tax administration in Ghana
Series: MAR 2024

AT – Mar 2024 – L3 – Q2a – International taxation

Discussing the tax implications of cross-border profit and transfer payments for non-resident companies.

Question

Trolex Ltd was incorporated in the United Kingdom. It manufactures watches for sale only in the Asian Markets. The company is a success story from its commercial enterprise in its production of “wonder watches.”

Vielo Ltd, a locally incorporated company with 4 shareholders, scanned the environment with the bid to start a business that would make it successful. The management of Vielo Ltd heard of the “wonder watches” sold by Trolex Ltd. Consequently, the management of Vielo Ltd placed an order for 10 million watches from Trolex Ltd. From the analysis, Trolex Ltd would make £600,000 from this transaction as profit. The sales value to be transferred to Trolex Ltd by Vielo Ltd amounts to £900 million.

The management of Vielo Ltd has written to the Kaneshie Office of the Ghana Revenue Authority on the tax implication of the payment.

Required:
Advise the Commissioner-General through the office manager on the tax implication of the profit and the transfer payment.

Answer

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Tags: Cross-border taxation, Profit repatriation, Trading in Ghana, Trading with Ghana
Level: Level 3

Topic: International taxation
Series: MAR 2024

AT – Mar 2024 – L3 – Q1b – International taxation

Discussing the challenges posed by double taxation agreements and the methods of granting double taxation relief.

Question

There is growing attention on the question of tax treaties signed by developing countries. The costs of tax treaties to developing countries have been highlighted in recent years by NGOs such as ActionAid and SOMO (Lewis, 2013). During 2014, an influential IMF paper warned that developing countries “would be well-advised to sign treaties only with considerable caution” (IMF, Spillovers on International Corporate Taxation, 2014) and the OECD, as part of its Base Erosion and Profit Shifting (BEPS) project, proposes to add text to the commentary of its model treaty to help countries decide “whether a treaty should be concluded with a State but also whether a State should seek to modify or replace an existing treaty or even, as a last resort, terminate a treaty” (OECD, Preventing the Granting of Treaty Benefits in Inappropriate Circumstances, 2014).

Required:

i) Examine the challenges double taxation agreements pose to Ghana.
(4 marks)

ii) Explain the methods of granting double taxation reliefs.
(4 marks)

Answer

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Tags: Double Taxation, Tax Compliance, Tax Relief, Tax treaties
Level: Level 3

Topic: International taxation
Series: MAR 2024

AT – Mar 2024 – L3 – Q1a – Tax administration in Ghana

Explaining the concept of free zones, their policy rationale, and the benefits for investors.

Question

The free zones enclave offers a fair business environment to all business operators irrespective of nationality, creed, or color. It has attracted both indigenes and foreigners. The benefits from the free zones appear very impressive, hence the numerous applications requesting to be granted free zone status.

Required:
i) Explain the concept of free zones.
(2 marks)

ii) Explain TWO (2) policy rationale for the establishment of the free zone.
(2 marks)

iii) Explain FOUR (4) reasons you would advise an investor to invest in a free zone enterprise.
(8 marks)

Answer

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Tags: Business Environment, Free zones, Investment benefits, Policy rationale, Tax Incentives
Level: Level 3

Topic: Tax administration in Ghana
Series: MAR 2024

MA – Mar 2024 – L2 – Q5 – Relevant cost and revenue | Decision making techniques

This question determines the optimal units for in-house production versus outsourcing based on machine hour constraints and relevant cost analysis.

Question

Hwerema Technologies produces various components for telecom companies. The demand for these components is increasing. However, Hwerema Technologies’ production facility is restricted to 50,000 machine hours. Therefore, the company is considering whether to import certain components to make up for the shortfall in production to meet market demand. In this respect, the following information has been gathered:

Factory overheads include fixed overheads estimated at GH¢1.50 per machine hour.

Required:
a) Determine the optimal units to be produced in-house and units to be imported. (16 marks)
b) State FOUR (4) qualitative considerations relevant to make-or-buy decisions. (4 marks)

Answer

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Tags: Machine Hours, Make or buy decision, Outsourcing, Production planning, Relevant Costs
Level: Level 2

Topic: Decision making techniques, Relevant Cost and Revenue
Series: MAR 2024

MA – Mar 2024 – L2 – Q4b – Decision making techniques

This question identifies the challenges associated with the implementation of a Just-In-Time (JIT) inventory management system.

Question

Just-In-Time (JIT) is an inventory management system in which goods are received from suppliers only as they are needed. The main objective of this method is to reduce inventory holding costs and increase inventory turnover. Despite the benefits of JIT, it has some disadvantages.

Required:
Examine THREE (3) challenges associated with the implementation of JIT Inventory Management System.

Answer

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Tags: Inventory Management, JIT, Operational Efficiency, Supply Chain
Level: Level 2

Topic: Decision making techniques
Series: MAR 2024

Series: MAR 2024

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SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

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SCS – MAR 2024 – L3 – Q6b – Strategy, stakeholders, and mission

Explain how Principles V and VI of the OECD Principles of Corporate Governance could be applied at Prestige.

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SCS – MAR 2024 – L3 – Q6a – Strategy, stakeholders, and mission

Describe and explain 5 key issues in corporate governance for Prestige.

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SCS – MAR 2024 – L3 – Q5c – International financial management

Evaluate the factors restricting foreign investment despite potential good returns.

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SCS – MAR 2024 – L3 – Q5b – Financial management

Calculate the effective rate of borrowing for three months and explain the advantages of convertible bonds.

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SCS – MAR 2024 – L3 – Q5a – Financial management

Calculate various financial ratios including ROCE, EPS, DPS, and TSR based on given financial data.

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SCS – MAR 2024 – L3 – Q4b – Strategy implementation

Advise on an appropriate HR strategy to harmonize the organizational structure for effective delivery at Prestige.

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SCS – MAR 2024 – L3 – Q4a – Strategy implementation

Explain how Prestige could leverage ICT using the four broad stages of e-business development to compete.

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SCS – MAR 2024 – L3 – Q3 – Functional strategies

Explain the potential benefits of resource sharing through common IT systems at Prestige.

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SCS – MAR 2024 – L3 – Q2 – Competitive advantage

Apply and appraise Porter’s three strategies for sustaining competitive advantage for Prestige Designers Ltd.

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AT – Mar 2024 – L3 – Q3c – Anti-avoidance measures

Explaining the difference between tax avoidance and tax evasion, examples of both, and limitations to tax planning.

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AT – Mar 2024 – L3 – Q3b – International taxation

Explaining the difference between economic and juridical double taxation.

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AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax

Discussing the tax implications of providing an asset to a company as capital or loan contribution.

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AT – Mar 2024 – L3 – Q2c – Business income – Corporate income tax

Evaluating the tax benefits of manufacturing ceramics using local and foreign materials versus importing finished ceramics.

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AT – Mar 2024 – L3 – Q2b – Tax administration in Ghana

Identifying categories of persons benefiting from locational tax policies and their respective tax benefits.

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AT – Mar 2024 – L3 – Q2a – International taxation

Discussing the tax implications of cross-border profit and transfer payments for non-resident companies.

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AT – Mar 2024 – L3 – Q1b – International taxation

Discussing the challenges posed by double taxation agreements and the methods of granting double taxation relief.

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AT – Mar 2024 – L3 – Q1a – Tax administration in Ghana

Explaining the concept of free zones, their policy rationale, and the benefits for investors.

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MA – Mar 2024 – L2 – Q5 – Relevant cost and revenue | Decision making techniques

This question determines the optimal units for in-house production versus outsourcing based on machine hour constraints and relevant cost analysis.

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MA – Mar 2024 – L2 – Q4b – Decision making techniques

This question identifies the challenges associated with the implementation of a Just-In-Time (JIT) inventory management system.

You're reporting an error for "MA – Mar 2024 – L2 – Q4b – Decision making techniques"

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