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FPSC · CSS 2022

Accountancy & Auditing, Paper II

100 marks · 3 hours · 7 questions
This paper Accountancy & Auditing · all yearsQ. 2 · Define audit planning. What factors…Q. 3 · Define an audit program. Give…Q. 4 · Define 'Fraud' as applied to…Q. 5 · ABC is a private limited…Q. 6 · Discuss ten allowable deductions under…Q. 7 · What is the purpose of…Q. 8 · Why do bonds with long…With this paper← 20222023 →
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SECTION–I

Q. 2

Define audit planning. What factors should be considered by an auditor in developing an audit plan.

(20)
Q. 3
  1. (a)Define an audit program. Give its advantages and disadvantages. [10]
  2. (b)What are the purposes/benefits of conducting audit through a fixed audit program? [10]
Q. 4
  1. (a)Define 'Fraud' as applied to accounting. What are different types of frauds? [10]
  2. (b)How will you detect and prevent the frauds related with embezzlement of cash? [10]

SECTION–II

Q. 5

ABC is a private limited company. The company manufactures and supplies consumer goods. ABC sells its product through various distributors in Karachi, Lahore and Islamabad. The following is the profit and loss account of ABC for the year ended on June 30, 2021: Rs."000" Rs."000" Sundry expenses 2,240 Gross Profit 235,200 Office salaries 29,120 Interest on bank deposit 300 Rent, rates & taxes 8,960 Recovered bad debts (Allowed in the past) 448 Legal charges 2,016 Dividend 672 Finance charges on leased assets 350 Advertisement 5,600 Auditor's fees 6,720 Cost of issue of debentures 5,600 Loss on sales of furniture 2,240 Provident fund contribution 7,840 Bad debts 4,480 Vehicle expenses 8,960 Fire insurance premium 7,840 Preliminary expenses 1,008 Provision for taxes 10,080 Provision for bad debts 4,480 Liquidated damages 3,360 Depreciation 44,800 Net Profit 80,926 Total 236,620 Total 236,620

  1. (a)Additional Information: Sundry expenses include donation of Rs. 502,000 paid to an unrecognized charitable institution. Office salaries include Rs.6,000,000 paid to one of the directors. Provident Fund is recognized by the Income Tax Department. Vehicle expenses are not vouched and verifiable to the extent of Rs.1,881,000. Actual depreciation works out to Rs.32,650,000 only. Lease rental for the year are Rs.1,750,000. Required: Calculate the taxable income and tax liability of the company for the tax year 2021 from the above data. [20]
Q. 6

Discuss ten allowable deductions under the head of “income from business” under section 20 of Income Tax Ordinance 2001.

(20)

SECTION–III

Q. 7
  1. (a)What is the purpose of financial markets? How can this purpose be accomplished efficiently? [10]
  2. (b)Discuss the functions of financial intermediaries. [10]
Q. 8

Why do bonds with long maturities fluctuate more in price than do bonds with short maturities, given the same change in yield to maturity?

(20)

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About this paper

The 2022 CSS Accountancy & Auditing paper set by the FPSC. Question wording only; questions marked “Not yet checked” have not been compared with the official paper yet.

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