Accountancy & Auditing, Paper II

Why computerized audit is required in the presence of manual audit? Elaborate the computerized auditing by application of Computer Assisted Audit Techniques (CAAT).

Define audit and auditing. Comment on the auditor’s (dependence) consideration of “reasonable assurance” and “True & Fair view” for the financial audit of a corporate entity.

Write notes on any TWO of the followings:

ABC (Pvt) Limited has earned income from business amounting to Rs. 75056000 during the tax year 2019. It also has a plaza situated in Faisalabad. The rent receivable from plaza amounts Rs. 47543000. Moreover, Company claims the following deductions (in Rs.): Description Amount (Rs.) Property repair expenses 4,324,200 Lawyer fee to defend the title of property 6,050,000 Insurance premium of the property 1,477,500 Property tax paid 5,422,300 Tax with held by the tenants @17.5% 8,320,025 Rental income paid to HBFC 3,600,000 Administrative and collection charges 2,900,000 Required: Calculate Total income and the Tax payable by the Company for the tax year 2019. The company is a Non-filer.

How many legal forms of Business Entity exist in Pakistan? Explain the features of Joint Stock Company and its procedure of formation (stages for formation of a Joint Stock Company-both Public limited and Private Limited companies).

XYZ Co. has Rs. 400 million in outstanding debt and Rs. 100 million in preferred stock. Its total value is Rs. 800 million. Its cost of debt ( $r_d$ ) is 8%, its cost of preferred stock is ( $r_{ps}$ ) 9%, and its cost of common stock ( $r_{cs}$ ) is 12%. The firm has recently had numerous depreciation tax shields as well as low earnings. Consequently, it does not pay taxes. What is its Weighted Average Cost of Capital (WACC) assuming it will continue to not pay taxes?