December 24, 2022

MONDAY: 5 December 2022. Afternoon Paper. Time Allowed: 3 hours. Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper. QUESTION ONE 1. Highlight FIVE record management processes that need to be documented in an organisation. (5 marks) 2.  Outline FIVE advantages of team communication. (5 marks) 3. Describe FIVE stages of the listening process. (10 marks) (Total: 20 marks) QUESTION TWO 1.  Identify FOUR factors that could determine the retention period of records. (4 marks) 2.  Analyse THREE qualities of a valuable business record. (6 marks) 3.  Describe FIVE steps that might be followed while writing a business report. (10 marks) (Total: 20 marks) QUESTION THREE 1. Highlight SIX limitations of online surveys. (6 marks) 2. State FOUR objectives of an annual departmental report within an organisation. (4 marks) 3. Discuss FIVE measures that could be put in place to protect loss of vital records in an organisation. (10 marks) (Total: 20 marks) QUESTION FOUR 1.  Highlight FIVE advantages of using emails in an organisation. (5 marks) 2.  Identify FIVE characteristics of organisations that maintain effective records management systems. (5 marks) 3.  Discuss FIVE measures that could be undertaken to deal with ethical dilemmas in communication. (10 marks) (Total: 20 marks) QUESTION FIVE 1. Identify SIX ways in which the sender oriented barriers could affect feedback in a communication process. (6 marks) 2. State SIX guidelines for effective face to face communication. (6 marks) 3. Analyse FOUR differences between oral communication and written communication. (8 marks) (Total: 20 marks) QUESTION SIX 1. Highlight FOUR merits of vertical filing. (4 marks) 2. State SIX objectives of an effective records management system in an organisation. (6 marks) 3. Discuss FIVE communication barriers associated with the hierarchical nature of the organisation structure. (10 marks) (Total: 20 marks) QUESTION SEVEN 1.  Highlight SIX ways of enhancing the effectiveness of a business proposal. (6 marks) 2. Identify FOUR reasons for using bullets while writing an office memorandum. (4 marks) 3.  Analyse FIVE tips that you might consider while delivering a public speech. (10 marks) (Total: 20 marks)

MONDAY: 5 December 2022. Morning Paper. Time Allowed: 3 hours. Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper. QUESTION ONE 1. Highlight FOUR roles of the executory level of management. (4 marks) 2. In the year 1959, two American sociologists Bertram Raven and John French categorised organisational power into five sources. Explain THREE of these sources. (6 marks) 3. XYZ limited has recently adopted an agile organisational structure. Explain FIVE features of this structure. (10 marks) (Total: 20 marks) QUESTION TWO 1.  Identify SIX circumstances where a managing director could apply autocratic leadership in an organisation. (6 marks) 2.  Explain THREE types of information that managers require at different levels of management. (6 marks) 3.  Some organisations prefer recruiting employees from outside the organisation. Analyse FOUR drawbacks associated with this source of recruitment. (8 marks) (Total: 20 marks) QUESTION THREE 1. List FOUR constraints that may hinder the completion of a project. (4 marks) 2. Examine THREE benefits of social media marketing strategy. (6 marks) 3. Explain FIVE strategies that managers could use to promote innovation in an organisation. (10 marks) (Total: 20 marks) QUESTION FOUR 1. Management can be classified as an art or a science. Outline FOUR features that make it an art. (4 marks) 2. Identify SIX advantages that a company could derive by conducting interviews online. (6 marks) 3.  Explain FIVE shortcomings of bureaucracy in management. (10 marks) (Total: 20 marks) QUESTION FIVE 1. Summarise THREE features of a control system. (6 marks) 2. Explain THREE benefits of entrepreneurship in your country. (6 marks) 3. Describe FOUR types of organisational change. (8 marks) (Total: 20 marks) QUESTION SIX 1.  List FIVE challenges facing management in the 21st Century. (5 marks) 2.  Highlight FIVE arguments against rational decision making. (5 marks) 3.  Evaluate FIVE benefits that could accrue to an organisation as a result of planning. (10 marks) (Total: 20 marks) QUESTION SEVEN 1.  Outline FOUR benefits of promoting employees internally in an organisation. (4 marks) 2.  Explain the THREE motivators in McClelland’s acquired needs theory. (6 marks) 3. Describe FIVE internal drivers that might bring change in an organisation. (10 marks) (Total: 20 marks)

MANAGEMENT PRINCIPLES AND PRACTICE DECEMBER 2022 PAST PAPER – Click to view COMMUNICATION SKILLS AND RECORDS MANAGEMENT DECEMBER 2022 PAST PAPER – Click to view INTRODUCTION TO LAW AND GOVERNANCE DECEMBER 2022 PAST PAPER – Click to view PRINCIPLES OF ACCOUNTING AND TAXATION DECEMBER 2022 PAST PAPER – Click to view HUMAN RESOURCES MANAGEMENT DECEMBER 2022 PAST PAPER – Click to view INFORMATION COMMUNICATION TECHNOLOGY DECEMBER 2022 PAST PAPER – Click to view COMPANY LAW DECEMBER 2022 PAST PAPER – Click to view PUBLIC SECTOR GOVERNANCE , POLICY AND ADMINISTRATION DECEMBER 2022 PAST PAPER – Click to view MEETINGS: COMPLIANCE AND ADMINISTRATION DECEMBER 2022 PAST PAPER – Click to view FINANCIAL MARKETS AND SPECIALISED INSTITUTIONS DECEMBER 2022 PAST PAPER – Click to view CORPORATE GOVERNANCE AND ETHICS DECEMBER 2022 PAST PAPER – Click to view RESEARCH CONSULTANCY AND ADVISORY DECEMBER 2022 PAST PAPER – Click to view STRATEGIC MANAGEMENT DECEMBER 2022 PAST PAPER – Click to view FINANCE FOR DECISION MAKING DECEMBER 2022 PAST PAPER – Click to view GOVERNANCE AND COMPLIANCE AUDIT DECEMBER 2022 PAST PAPER – Click to view BOARDROOM DYNAMICS DECEMBER 2022 PAST PAPER – Click to view

WEDNESDAY: 14 December 2022. Morning Paper. Time allowed: 3 hours. Answer ALL questions in SECTION I and any THREE (3) questions in SECTION II. SECTION I has twenty (20) Multiple Choice Questions each carrying two (2) marks. SECTION II has five (5) practical questions each carrying twenty (20) marks. Under SECTION II, you are required to create Ms Excel Worksheets with the name of the entity in each question and input your workings and solutions. You may use the Excel template within the question. SECTION I – TOTAL 40 MARKS Question One Data models evolve from conceptual (that is; a quick, high-level view of the business requirement) to logical (where the entities involved are expanded and include more detail) and finally the physical data model, which can be implemented with a specific database provider (like Oracle and SQL Server). Which of the following choices is correct? A. The entire statement is true B. Only the statement on conceptual data model is true C. Only the statement on logical data model is true D. Only the statement on physical data model is true (2 marks) Question Two Which of the following would be more appropriate to replace the question mark in the following diagram? A. Data analysis B. Data science C. Statistical inference D. Predictive modelling (2 marks) Question Three According to cross-industry standard process for data mining, data modelling involves: A. Obtaining data and information from different sources, processing and storing for future reference B. Fixing or removing incorrect, corrupted, incorrectly formatted data and information C. Collecting data and information about business requirements from stakeholders and end users D. Creating a visual representation of either a whole information system or parts of it to communicate connections between data points and structures (2 marks) Question Four Read the statements below and answer the question that follows: Data mining relates to turning raw data into useful information. Data mining using built-in algorithms should guarantee a result. Which of the following choices apply? A. The two statements are true B. Only the first statement is true C. Only the second statement is true D. None of the statements is true (2 marks) Question Five Which of the following ‘Vs’ of data describes data as multifactor, unstructured and dynamic? A. Veracity B. Value C. Variability D. Variety (2 marks) Question Six Which of the following is an example of discrete data? A. Number of children B. Height of children C. Behaviour of children D. Test scores of children (2 marks) Question Seven Ms Dare Mongare is the Chief Finance Officer of Modern Company Limited. She is using data analytics in estimating future risks that the company is facing and also cash budgeting, with scenario analysis. By carrying out risk management and cash budgeting, she is applying: A. Predictive analytics for risk management and cash budgeting B. Predictive analytics for risk management and prescriptive analytics for cash budgeting C. Predictive analytics for cash budgeting and prescriptive analytics for risk Management D. Prescriptive analytics for risk management and cash budgeting (2 marks) Question Eight Based on the principles in the Unified Ethical Frame for Big Data Analytics, which of the following applies to the principle of Fairness? A. Thinking through the potential impacts of our data use on all interested parties B. Sustainability of the data over time C. Transparency and inclusivity of the data D. Data benefiting both the business and customers (2 marks) Question Nine Which of the following applications will likely NOT be used for cloud computing? A. Azure B. AWS C. SQL D. Alibaba Cl (2 marks) Question Ten In data science, a relationship between two entities is called _______________________. A. Binary B. Quartenary C. Unary D. None of the above (2 marks) Question Eleven Which of the following data visualisation tools will likely present a relationship of more than two variables effectively? A. Scatter Graph B. Bubble Chart C. Column Chart D. Line Chart (2 marks) Question Twelve _______________________ graph displays information as a series of data points connected by straight line segments. A. Line B. Bar C. Scatter D. Histogram (2 marks) Question Thirteen A data breach occurs when the organisation’s data suffers a security incident resulting in a breach of confidentiality, availability or integrity. According to the applicable data protection law, in the case of a data breach, the organisation should: A. Notify the supervisory authority within 48 hours of the incident whether or not it poses a risk to the organisation and affected individuals B. Notify the supervisory authority within 48 hours of the incident, only if it poses a risk to the organisation and affected individuals C. Notify the supervisory authority within 72 hours of the incident whether or not it poses a risk to the organisation and affected individuals D. Notify the supervisory authority within 72 hours of the incident, only if it poses a risk to the organisation and individuals (2 marks) Question Fourteen Data fishing is sometimes referred to as A. Data bagging B. Data dredging C. Data merging D. Data pooling (2 marks) Question Fifteen One of the challenges of big data is the fact that there is so much data, so many techniques and models to analyse the data and several ways to interpret the findings and results. The data analyst should therefore be more sceptical in the following aspects EXCEPT on the: A. Sources of data B. Data collection C. Data analysis D. Assumptions (2 marks) Question Sixteen Which of the following is NOT a principle of data protection as provided by the data protection laws in various countries? A. Process data lawfully B. Maximise data collection C. Ensure data quality D. Limit data processing (2 marks) Question Seventeen Two challenges of big data and analytics is inaccessibility of data and low speed of access to data. Which one of the following actions by an organisation will address the two challenges? A. Providing access to all data to specified employees B. Providing access to selected data to all employees C.

THURSDAY: 8 December 2022. Morning Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper. QUESTION ONE 1. In a research publication on “Systemic Corruption and Public Procurement in Developing Countries”, the author noted that “Corruption in public procurement affects development and quality of life of citizens in developing countries. The increase in anti-corruption measures globally reflects a consensus that corruption is pervasive and expensive. Public procurement is one area that is prone to corruption due to the huge sums of money involved; the availability of information; and the bureaucratic nature of decision-making, which together present opportunities for abuse. In developing countries, procurement corruption is prevalent because of institutional weaknesses, lack of enforced accountability mechanisms and a culture of silence in relation to public sector malfeasance”. Required: In the context of the above statement: Discuss FIVE public procurement corruption schemes that an accounting officer should take cognisance of. (10 marks) When the accounting officer of a procuring entity discovers circumstances that could affect the credibility of the procurement process, he is empowered by the Public Procurement and Asset Disposal Act to terminate or cancel procurement or asset disposal proceedings without entering into a contract. Summarise FIVE circumstances under which the accounting officer is empowered to terminate or cancel procurement or asset disposal proceedings as per the Public Procurement and Asset Disposal Act or equivalent legislation. (5 marks) 2. There is an ever-closer focus on improving the quality of public financial management around the world, with many countries making important and impressive achievements in strengthening public financial management. Explore FIVE challenges faced by your country in the implementation of public financial management best practices. (5 marks) (Total: 20 marks) QUESTION TWO 1. The National Treasury is established pursuant to Article 225 of the Constitution or equivalent legislation as an entity of the national government to help the government discharge the public financial management responsibilities. Describe EIGHT responsibilities of The National Treasury as enshrined in the Constitution. (8 marks) 2. The Cabinet Secretary is empowered to guarantee loans of a county government or any other borrower on behalf of the national government and ensure that such a loan is approved by Parliament. Identify SIX conditions to be met in order for the Cabinet Secretary to guarantee such loans as per Section 58 of the Public Finance Management Act, 2012 or equivalent legislation. (6 marks) 3. Explain the responsibilities of the Senate Budget Committee in public finance matters as per relevant legislations. (6 marks) (Total: 20 marks) QUESTION THREE 1. Analyse TWO types of expenditure that are included in the consolidated fund services. (4 marks) 2.  The Public Investment Management Unit was established at The National Treasury to reduce overlaps in government programs, curb runaway project costs and help to improve the quality of life for citizens. Discuss FOUR roles of the Public Investment Management Unit or its equivalent as mandated by the National Treasury. (8 marks) 3. Most developing and transition countries have devoted an unprecedented level of attention to the reform of public financial management systems. The results have been mixed with some exceptions, reform progress has been slow and the benefits elusive. Nevertheless, some countries have been more successful in implementing public financial management reforms than others. Evaluate FOUR critical factors needed by developing countries for successful public financial management reforms. (8 marks) (Total: 20 marks) QUESTION FOUR 1.  The Head of Internal Audit Unit under a national government entity should enjoy operational independence through the reporting structure by reporting administratively to the Accounting Officer and functionally to the Audit Committee. Required: Analyse FOUR measures that should be undertaken by the accounting officer of a national government entity to enhance the independence of the internal audit unit. (4 marks) The audit committee plays a key role in supporting and overseeing aspects of an internal audit function’s activities. Summarise SIX roles of the audit committee in ensuring that the internal audit function performs effectively and delivers its mandate. (6 marks) 2. In an annual conference held in your country on “Closing the gaps in budget execution”, the keynote speaker observed that the importance of budget execution is reflected in its contribution to economic growth. He added that efficient and effective use of public funds improves the capability of governments and its systems to utilise resources that achieve growth and development targets. Required: In line with the above observation: Discuss the guidelines that should be observed at all times during the national government budget formulation and approval. (6 marks) Describe TWO matters that should be provided for in the Appropriation Bills. (4 marks) (Total: 20 marks) QUESTION FIVE 1.  The Public Audit Act 2015 empowers the Auditor-General to outsource audit services from duly registered audit firms. Analyse SIX provisions of Section 23 of The Public Audit Act 2015 or its equivalent in relation to outsourcing audit services. (6 marks) 2. The Cabinet Secretary for The National Treasury has the responsibility of prescribing the format to be used in preparing the estimates of revenues for a particular fiscal year. Analyse the matters that should be included in the format of estimate of revenues as provisioned by Section 59 of the Public Finance Management Regulations, 2020 or its equivalent. (5 marks) 3. Evaluate THREE types of funds administered by county governments as provisioned by the Public Finance Management Act, 2012 or its equivalent. (9 marks) (Total: 20 marks)

WEDNESDAY: 7 December 2022. Afternoon Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings. Do NOT write anything on this paper. QUESTION ONE 1.  In the context of environmental management accounting, explain FOUR types of environmental costs. (8 marks) 2.  Trans Ltd. has provided the following operating statement, which represents an attempt to compare the actual performance for the quarter which has just ended with the budget: Required: Using flexible budgeting approach, redraft the operating statements so as to provide a more realistic indication of the variances. (8 marks) Discuss TWO problems associated with the forecasting of figures which are to be used in flexible budgeting. (4 marks) (Total: 20 marks) QUESTION TWO 1. Lengo Ltd. is considering marketing a new product. The fixed cost of this product will amount to Sh.5,000,000. There are three uncertain factors namely; selling price, variable cost and annual sales volume. The product has a life of only one year and the various possible levels of these factors together with estimated probabilities are given below: Additional information: 1. Assume that the three factors are statistically independent. 2. The company uses cost-volume-profit (CVP) analysis to make decisions. 3. The following random numbers are provided: Required Using CVP analysis criteria, simulate the problem and determine the average profits. (10 marks) 2. Jikaze Ltd. is organised into divisions. Divisional managers are rewarded through a remuneration package which is linked to accounting rate of return (ARR) performance measures. Venus Division of Jikaze Ltd. is currently investigating two mutually exclusive investment proposals namely MX and JX. If the proposals are viable, Venus Division wishes to assign priority in the event that funds may not be available to cover both proposals. Details of the two mutually exclusive proposals are: Additional information: 1. The management assesses the cost of capital to the company at 16%. 2. The Accounting Rate of Return (ARR) calculation is based on the accounting profit which is computed by adding back depreciation to net cash inflow of each year. 3. Depreciation is on straight-line basis over the assets’ useful life. 4. Net present value (NPV) method is used to estimate the most viable project when using project life cycle costing. 5. Ignore tax and residual value. 6. The present value interest factor (PVIF) of the proposal is as follows: Required: Advise the management of Jikaze Ltd. on the most viable investment proposal using the following performance appraisal measures: Product life cycle costing. (5 marks) Accounting rate of return (ARR). (5 marks) (Total: 20 marks) QUESTION THREE 1. The complex environment in which most businesses operate today makes it virtually impossible for most firms to be controlled centrally. This is because it is not possible for central management to have all the relevant information and time to determine the detailed plans for all the organisation. Some degree of decentralisation is essential for all but the smallest firms. Organisations decentralise by creating responsibility centres. Required: In the context of the above statement, identify FOUR responsibility centres. (8 marks) 2.  Maono Ltd. is investigating the financial viability of a new product branded “Zem”. Product Zem is a short life product of six months. The following estimated information is available in respect of product Zem: 1. Sales should be 10,000 units per month in batches of 100 units on a just-in-time production basis. 2. An average selling price of Sh.120,000 per batch of 100 units is expected for a six-month life cycle. 3. An 80% learning curve will apply for the six months’ life-cycle period. 4. The labour requirement for the first batch in month 1 will be 500 hours at Sh.500 per hour. 5. Variable overhead will be absorbed at a rate of Sh.200 per labour hour. 6. Direct material input will be Sh.50,000 per batch of product Zem for the first 200 batches. The next 200 batches are expected to cost 90% of the initial batch cost. All batches thereafter will cost 90% of the batch cost for each of the second 200 batches. 7. Product Zem will incur directly attributable fixed costs of Sh.1,500,000 per month. 8. The initial investment for the new product will be Sh.7,500,000 with no residual value irrespective of the life of the product. 9. A target cash flow required over the life of the product must be sufficient to provide for a 331 /3% target return for a six-month life cycle. 10. The learning curve formula is Y = axb Where: Y = Cumulative average time per batch a = time taken to produce initial batch x = cumulative units of batches b = learning curve index Required: The learning curve index and model. (4 marks) Compute the cost gap or cost savings in the target cash flow of product Zem over its six-month life cycle. (8 marks) (Total: 20 marks) QUESTION FOUR Huruma Ltd. is a client of ABX National Bank. The Managing Director of Huruma Ltd. visited the bank’s offices to seek for an additional line of credit. In the ensuing discussions, the bank credit officer noticed that Huruma Ltd. could save a substantial amount of money by improving on its inventory management. The credit officer invited the Management Accountant of the company for further consultation. From the conversation, it emerged that the company holds a substantial quantity of a particular raw material in its warehouse. The Management Accountant provided the following information on the raw material: The company’s policy is to order 5,000 units each time and maintain a safety stock of 3,000 units. The annual demand for the raw material is 45,000 units. The lead time for an order is 10 working days. The Management Accountant has also indicated that if there is a stock-out, it would be necessary to obtain the raw material by a special courier service at an additional cost of Sh.81,000 per stock-out. The probabilities of a stock-out at various safety stock levels were given as follows: Additional information:

WEDNESDAY: 7 December 2022. Morning Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper. QUESTION ONE 1.  The role of auditors in non-financial audits is increasingly coming under scrutiny. One such area of interest is in “green” audits, also referred to as environmental audits. A recent article in a leading accountancy journal highlighted this fact as below: “In many jurisdictions, corporate auditors are not under any obligation to report to stakeholders of the entities on the impact of social and environmental issues. It is therefore important that regulators of the accountancy profession set prescribed and dedicated standards on social and environmental issues for auditors”. Noting the above trends, the accountancy regulatory body in your country has engaged you to develop a discussion paper to guide policy on conduct of environmental audits by auditors. Required: Draft a discussion paper focusing on the following, clearly elaborating on each: FOUR limitations of financial accounting in reflecting the social and environmental impact of organisations. (4 marks) THREE objectives of environmental audits. (3 marks) SIX information components that should be disclosed in an environmental status report. (6 marks) 2. Describe THREE circumstances under which a professional auditor may reveal confidential information relating to the client. (3 marks) “Independence threats” are likely to affect an auditor’s ability to comply with the fundamental principles of ethics. Required: With relevant examples, justify the above statement. (4 marks) (Total: 20 marks) QUESTION TWO 1.  During a recent seminar on adapting the audit approach to emerging technological changes, a presenter made the following statement: “To ensure a successful audit of internet/mobile banking applications, the audit team must understand the business environment in which they are operating and the prevailing conditions such as regulatory requirements, business requirements and stakeholders’ needs. The audit team needs to put together a robust internet/mobile banking and electronic payment application audit program”. Required: With reference to the above statement, discuss FOUR areas of the internet/mobile banking applications and supporting information technology (IT) infrastructure that should be reviewed to confirm the adequacy of controls and ensure security of the applications. (8 marks) 2. Analyse FOUR ways in which auditors might reduce the risk of professional liability in their dealings with clients. (8 marks) 3. In the context of audit peer reviews: Distinguish between a “systems review” and an “engagement review”. (2 marks) Citing reasons, explain the importance of peer review. (2 marks) (Total: 20 marks) QUESTION THREE Jua Kali Motors Ltd. is a vehicle repair shop founded some years ago by Ms Faulu who owns all of the shares apart from a qualifying share held by her husband and co-director. She runs the workshop with the help of a foreman, five mechanics and a clerk cum typist. A quotation is issued for all jobs and about 80% of the work is on insurance accident claims. The insurance companies require typed, pre-numbered quotations and invoices for insurance work. For the very large claims and occasionally for smaller claims, the insurance companies bring in their own assessors to inspect the vehicles before authorising the repairs. Private work procedures are less formal and customers are required to pay before collecting their vehicles. Small stocks of parts and service material are held, but most parts are ordered as required and accounts maintained with spare parts suppliers. Your firm of Certified Public Accountants prepares and audits the accounts and provides tax and other advice to Faulu Motors. Required: 1. Discuss the audit procedures that you would perform to assess the internal controls operations and ultimately the reliability of financial reports. (10 marks) 2. Citing FOUR reasons, justify to Ms. Faulu on why her company should continue to engage an auditor annually for audit of the business. (8 marks) Suggest an alternative to a full audit that Jua Kali Motors Ltd. could consider. (2 marks) (Total: 20 marks) QUESTION FOUR Achievers Holdings Ltd. is a non-trading holding company with several subsidiaries within East Africa. The company is based in Nairobi with investment holdings ranging from 75% to 100% in several subsidiary companies. You are the audit manager responsible for the audit of the group accounts. One subsidiary company operating in Rwanda is audited by your firm through a branch office in Kigali. The other subsidiaries in Tanzania and Uganda are audited by other audit firms based in the respective countries. Assume that the financial year end of Achievers Holdings Ltd. is 30 June, but the subsidiary companies based in Uganda and Rwanda are engaged in highly seasonal businesses, and have 31 March as their financial year end. The subsidiary company in Tanzania was acquired during the year ended 30 June 2022. Required: 1.  Describe the evidence you would expect to obtain in your review of the audit work undertaken in Rwanda, Uganda and Tanzania. (8 marks) 2. Following the completion of the subsidiary companies audits, discuss the matters that you would address in your review of the consolidated financial statements of Achievers Holdings Ltd. for the year ended 30 June 2022, with specific focus on: General issues touching on consolidated accounts. (6 marks) Audit issues relating to subsidiaries with different year ends. (3 marks) Audit issues relating to the newly acquired subsidiary in Tanzania. (3 marks) (Total: 20 marks) QUESTION FIVE 1. Describe TWO risks that an auditor could face in the audit of each the following items: Related party transactions. (2 marks) Construction contracts. (2 marks) Impairment. (2 marks) Contingent liabilities. (2 marks) 2. You are the auditor of Saidia Development Trust (SDT), a not-for-profit entity supporting charitable activities. SDT has three major donors one of whom contributes over 80% of the entity’s budget. The major donor has placed a condition that operating cost must not exceed 10% of the total budget. Funding from each of the donors is designated and restricted to specific projects. In some instances, donor funds have not been disbursed in time making it necessary for SDT to

TUESDAY: 6 December 2022. Afternoon Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings. Any assumptions made must be clearly and concisely stated. Do NOT write anything on this paper. RATES OF TAX (Including wife’s employment, self-employment and professional income rates of tax). Year of income 2021. QUESTION ONE 1. The tax law envisages various approaches and levels of resolving tax disputes, including the administrative decisions, quasi-judicial process involving tax appeals tribunal (TAT), formal judicial process involving the High Court or appeal to the Court of Appeal and alternative dispute resolution. Some of the relevant laws include the Tax Procedures Act, Tax Appeals Tribunal Act and other relevant tax laws. Required: With reference to the above statement and quoting relevant tax provisions, explain the application of each of the following in tax disputes settlement: Tax appeals tribunal. (3 marks) High Court. (3 marks) Court of Appeal. (3 marks) Out of Court settlement. (3 marks) 2. Consider the following hypothetical case: Axe Ltd., incorporated in your Country, signed a service agreement to provide marketing and liaison services to the related non-resident entities located in the United Kingdom (UK). Under the agreement, Axe Ltd. was to be compensated off cost plus mark-up basis. The related non-resident entities executed separate agreements with distributors of their products who they invoiced directly. The revenue authority imposed value added tax (VAT) on the above marketing services provided by Axe Ltd. On the other hand, Axe Ltd. argued that the marketing support services enhanced brand awareness of the products sold by the non-resident entities in your country. On this basis, the services were exported, hence zero-rated. The above case has been bought before the tax tribunal. Required: Discuss TWO factors that the Tribunal might consider in ruling in favour of Axe Ltd. (4 marks) 3. Explain TWO ethical principles governing the services provided by tax practitioners. (4 marks) (Total: 20 marks) QUESTION TWO 1. Mawingu Ltd. is a foreign subsidiary company operating a fleet of passenger and cargo aircrafts in Country A. The flights are between Country A and other countries. The operating results for the year ended 31 December 2021 are as follows: 2. Investment allowances were agreed with the Revenue Authority at 85% of depreciation charged in the account. 3. Assume a corporation tax rate of 30%. Required: Compute adjusted taxable profit or loss of Mawingu Ltd. for the year ended 31 December 2021. (8 marks) Compute tax payable (or refundable) for Mawingu Ltd. (2 marks) 2. ZamZam Company Ltd. purchased a property whose cash price was Sh.1,264,000 under the following terms: 1. The deposit paid for the purchase of the property was Sh.400,000. 2. The balance of the purchase price was to be paid over a 3-year period at a monthly instalment of Sh.40,000 inclusive of Sh.16,000 per month as mortgage interest. Required: Assuming the property was sold as follows: Option I: For Sh.2,000,000 after payment of twenty-four instalments. Option II: For Sh.2,680,000 after full payment of all the instalments, cost of valuation Sh.54,000 and legal fees Sh.72,000. Calculate capital gains tax under each option. (6 marks) 3. Darubini Ltd. is under tax investigation by the Revenue Authority, accused of obstructing/hindering the investigation officer in the exercise of his function. Highlight FOUR aspects that may constitute obstruction in the above case. (4 marks) (Total: 20 marks) QUESTION THREE 1. A, B and C have been trading in a small size partnership sharing profits and losses in the ratio of 2:2:1 respectively. C retired from the partnership on 31 August 2021 while A and B agreed to continue with the business charging interest on capital at the rate of 15% per annum as in the previous period when C was still in the partnership. Due to the changes in the partnership, goodwill was valued at Sh.1,200,000 and was to be written off immediately. The following trial balance was extracted as at 31 December 2021: Additional information: 1. Sales and purchases were inclusive of value added tax (VAT) at the rate of 16%. Cash sales amounted to Sh.358,400 (VAT inclusive) and were excluded from the above accounts. 2. The following assets were acquired by the business immediately after retirement of C. 4. Interest on drawings was charged at the rate of 10% per annum. 5. Inventory at year end was valued at Sh.364,000 and the partnership had consistently undervalued inventory at each year end by 20%. 6. Salary and wages include partners’ salary of Sh.420,000 shared by the partners according to the profit and loss sharing ratio. 7. Allowance for doubtful debts was to be increased to Sh.24,800 at year end. Bad debts written off amounted to Sh.40,000 of which Sh.8,000 relates to general bad debts. 8. Prepaid insurance at the beginning of the year amounted to Sh.8,000 while insurance owing at year end amounted to Sh13,000. 9. Accrued sundry expenses as at 1 January 2021 and 31 December 2021 amounted to Sh.10,000 and Sh.2,000 respectively. 10. C was paid all his dues on 15 September 2021. The profits and losses were to be shared equally after C’s retirement. 11. Unless otherwise stated, assume that all revenues and expenses accrued evenly throughout the year. Required: Prepare a statement of adjusted taxable profit or loss for the partnership for the year ended 31 December 2021. (10 marks) Determine the taxable income for each partner. (6 marks) 2. The Commissioner is empowered to cancel or terminate the license of any person acting as a tax agent at any time. Summarise FOUR circumstances under which this may be possible. (4 marks) (Total: 20 marks) QUESTION FOUR 1. The African Growth and Opportunity Act (AGOA) is a United States Trade Act enacted in year 2000 as a legislation that significantly enhances market access to the United States for qualifying Sub-Sahara African countries. Analyse THREE conditions that the above countries must meet in order to qualify and be eligible for AGOA consideration. (6 marks

TUESDAY: 6 December 2022. Morning Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings. Do NOT write anything on this paper. QUESTION ONE 1. Explain the term “real option” as used in capital investment appraisal. (2 marks) Evaluate THREE types of real options. (6 marks) 2. The management of College Publishers Ltd. has estimated the following initial cash outlays and net cash flows and probabilities for a new printing process in each case scenario: Year 0 is the initial cost of the new printing process, years 1 – 5 are the operating net cash flows and year 5* is the estimated salvage value. The firm’s cost of capital for a project of average risk is 13% per annum. Required: Assuming that the above project has an average risk, compute the expected net present value (ENPV) of the project. (4 marks) A sensitivity analysis of the salvage value if this variable changes from the base case value by + (plus or minus) 80%. (4 marks) Assume that all cash flows are positive perfectly correlated and that there are only three possible cash flow scenarios over time namely; worst case, most probable case and best case with probabilities of 0.2, 0.6 and 0.2 respectively. Determine the project’s standard deviation of the net present value (NPV). (4 marks) (Total: 20 marks) QUESTION TWO 1.  The modern portfolio theory (MPT) is a practical method for selecting investments in order to maximise their overall returns within an acceptable level of risk. Required: Outline FIVE assumptions of modern portfolio theory (MPT). (5 marks) 2. The following information is provided on the market, risk free rate and two stocks A and B: Required: Draw the capital market line (CML). (3 marks) Calculate the betas of Stock A and Stock B. (2 marks) Calculate the Alphas (α) of the Stock A and Stock B. (2 marks) Plot the Stocks A and Stock B relative to the CML and comment. (3 marks) 3. Describe five forms of debt financing in regards to real estate. (5 marks) (Total: 20 marks) QUESTION THREE 1. Two firms, A Ltd. and B Ltd. operate in the same industry. The two firms are similar in all aspects except for their capital structures. The following additional information is available: 1. A Ltd. is financed using Sh.100 million worth of ordinary shares. 2. B Ltd. is financed using Sh.50 million in ordinary shares and Sh.50 million 7% debentures. 3. The earnings before interest and tax (EBIT) are Sh.10 million for both firms. These earnings are expected to remain constant indefinitely. 4. The cost of equity in A Ltd. is 10%. 5. The corporate tax rate is 30%. Required: Using the Modigliani and Miller (MM) model, determine the following: The market value of A Ltd. and B Ltd. (4 marks) The weighted average cost of capital (WACC) of A Ltd. and B. Ltd. (4 marks) 2. Rema Limited, a United Kingdom (UK) based firm bought goods from a United States (US) supplier and must pay US Dollars 4,000,000 in three months time. The company is considering three choices in order to hedge the transaction exposure and has collected the following information: Required: Determine the amount payable using the following methods: Forward exchange contracts. (4 marks) Money market borrowing or lending. (4 marks) Making a leading payment. (2 marks) 3. Advise on the cheapest method based on your results in 2 (i) – 2(iii) above. (2 marks) (Total: 20 marks) QUESTION FOUR 1.  Examine FOUR stages that a company might go through during restructuring. (4 marks) 2. The Altman formula for prediction of bankruptcy is given as follows: Required The Z-score for each of the three companies. (6 marks) Comment on your results in 2 (i) above. (2 marks) 3. Kilop Ltd. has decided to instal a new milling machine. Additional information: 1. The machine costs Sh.28,000,000 and it would have a useful life of five years with a trade in value of Sh.5,600,000 at the end of year five. 2. The company has two options: Option A Purchase the machine for cash using a bank facility. The current rate of interest is 15% before tax. Option B Lease the machine under an agreement which would entail payment of Sh.6,720,000 at the end of each year for the next five years. 3. The corporate rate of tax is 30%. 4. Capital allowance is given at the rate of 100% in year one if the machine is purchased. 5. Tax is payable one year in arrears. Required: Advise Kilop Ltd. whether to lease or buy the machine. (8 marks) (Total: 20 marks) QUESTION FIVE 1. Explain FIVE limitations of financial derivatives used in financial risk management. (5 marks) 2. The International Monetary Fund (IMF) has implemented many reforms in recent years designed to strengthen its cooperative nature and improve its ability to serve its membership. In context of the above statement, propose FOUR main reforms that have been designed by IMF in recent years. (4 marks) 3. Alpha Ltd. and Beta Ltd. are companies operating in the same line of business. In the recent past, Alpha Ltd. has experienced very stiff competition from Beta Ltd. such that Alpha Ltd. is considering acquiring Beta Ltd. in order to consolidate its market share. The following financial data is available about the two firms: Both companies are in the 30% income tax bracket. Required: Maximum exchange ratio that Alpha Ltd. should agree to if it expects no dilution in its post acquisition Earning Per Share (EPS). (2 marks) Alpha Ltd.’s post acquisition earning per share if the companies agree on an offer price of Sh.40. (2 marks) Alpha Ltd.’s post acquisition earning per share if for every 200 ordinary shares of Beta Ltd.’s are exchanged for 5 units of 10% debenture of Sh.500 per value each. (3 marks) Combined operating profit (EBIT) and post acquisition earning per share at point of indifference between earnings of

MONDAY: 5 December 2022. Afternoon Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings Do NOT write anything on this paper. QUESTION ONE 1.  In the context of IAS 16 (Property, Plant and Equipment): Explain how the initial cost of property, plant and equipment should be measured and the treatment of subsequent expenditure. (4 marks) Describe the requirements regarding the revaluation of non-current assets, the treatment of surpluses and deficits on revaluation and the gains or losses on disposal. (6 marks) 2. Voxy Limited leased a factory to Teana Limited with effect from 1 July 2022. The lease is for four (4) years at an annual lease rental of Sh.4,000,000 payable annually in arrears. The lease contract provides that the lessee shall be responsible for the insurance and maintenance of the factory during the lease term. The implicit rate of interest in the lease is 15% per annum. Required: Demonstrate, with suitable calculations, the accounting treatment of the above lease transactions in the financial statements of Voxy Limited (lessor) for the years ended 30 June 2023, 2024, 2025 and 2026. (10 marks) (Total: 20 marks) QUESTION TWO 1. Explain TWO challenges that a business entity might face while preparing segmental reports. (2 marks) 2. IFRS 2 “Share Based Payments”, identifies three types of share based transactions. Required: Explain the THREE types of share based transactions in each case indicating their accounting treatment in line with IFRS 2 “Shared Based Payments”. (6 marks) 3. The objective of International Public Sector Accounting Standard (IPSAS) 21 “Impairment of Non-cash generating Assets”, is to prescribe the procedures which a public sector entity applies to determine whether a non- cash generating asset is impaired. Required: With regard to International Public Sector Accounting Standard (IPSAS) 21, “Impairment of Non-cash generating Assets”, briefly explain the accounting treatment of impairment of non-cash generating assets and how the requirements of IPSAS 21 compare with those of the International Accounting Standard (IAS) 36 “Impairment of Assets”, applicable to commercial sector entities. (6 marks) 4. Discuss the nature and contents of Management Commentary in the context of enhancing the usefulness of financial information to the users of financial statements. (6 marks) (Total: 20 marks) QUESTION THREE H Limited, a public limited entity, operates in the information technology sector. It has made several investments in other companies within the industry, which has earned it market leadership in the sector. The following draft financial statements for the year ended 31 October 2022 relate to H Limited and its investment companies. Additional information: 1. H Limited acquired an 80% ordinary shareholding in S Limited on 1 November 2019 when the retained earnings of S Limited stood at Sh.340 million. The acquisition consideration comprised cash of Sh.1,830 million. The fair values of the identifiable net assets of S Limited at acquisition date were Sh.2,440 million. The excess of the fair values over the carrying values was due to an unrecognised brand whose remaining economic useful life at the date of acquisition was five (5) years. 2. M Limited is the main competitor of H Limited and on 1 May 2022, M Limited and H Limited each acquired 50% of the 200 million ordinary shares of Sh.10 each in L Limited. The consideration paid by H Limited consisted of cash of Sh.15 per share and also a 1 for 2 share exchange when the market price of H Limited’s share was Sh.20 each. M Limited also paid Sh.15 per share for their interest but did not issue any shares to the owners of L Limited. The ordinary shares of L Limited have one voting right each. Upon the acquisition, H Limited had a contractual right to appoint 60% of the board of L Limited, with the remaining 40% appointed by M Limited. M Limited and H Limited each appointed one member to L Limited’s senior management team. It is the senior manager appointed by H Limited who makes the key decisions regarding the development of L Limited’s new technologies, its principal revenue stream, the market it will operate in and how it is financed. The fair values of L Limited’s net assets approximated their carrying values at the date of acquisition. 3. H Limited has a policy of measuring the non-controlling interests at fair value. The non-controlling interest in S Limited had a fair value of Sh.970 million at 1 November 2019. 4. During the year ended 31 October 2022, S Limited sold goods worth Sh.400 million to H Limited. S Limited reports a gross profit margin of 25% on all its sales. 20% of these goods remained in the closing inventory of H Limited as at 31 October 2022. 5. As at 31 October 2022, no impairment had arisen in respect of the goodwill arising on the acquisition of S Limited and L Limited. 6. None of the group companies paid dividends during the year ended 31 October 2022. 7. S Limited had not issued any ordinary shares since its shares were acquired by H Limited. Required: Consolidated statement of profit or loss and other comprehensive income for H Group for the year ended 31 October 2022. (8 marks) Consolidated statement of financial position for H Group as at 31 October 2022. (12 marks) (Total: 20 marks) QUESTION FOUR 1.  In the context of IAS 33 (Earnings Per Share), explain the meaning of the following terms: Contingently issuable ordinary shares. (2 marks) Potential ordinary shares. (2 marks) 2. D Limited’s equity balances as at 1 October 2020 comprised the following: Additional information: 1. On 1 January 2021, the company issued 400,000 ordinary shares at full market value. 2. On 1 April 2021, the company made a 1 for 5 bonus issue of ordinary shares to the existing shareholders, utilising its retained earnings. 3. On 1 December 2021, D Limited invited its ordinary shareholders for a rights issue in the proportion of 1 for 4 at Sh.12 per share.

MONDAY: 5 December 2022. Morning Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper. QUESTION ONE FATUMA APIO Fatuma Apio has such a strong leadership presence that it would be difficult to talk about Bora Association of Manufacturers (BAM) without mentioning her name. For close to a decade now, press conferences, newspaper commentaries, trade and investment talks associated with BAM always had a permanent fixture that was its Chief Executive Officer (CEO), Fatuma Apio. As she exits BAM due to end of her term of service, her charisma as a superstar CEO may become a difficult feat for the incoming CEO, Musa Mapito, to emulate. Fatuma Apio is well known in the manufacturing industry due to her signature look. She dresses in Ankara coats, which are quite uncommon in this part of the world. Fatuma rose through the ranks having joined BAM as the head of policy, research and advocacy in the year 2005. She took over the leadership mantle of BAM in the year 2012 after the Board of BAM pushed out its then CEO, Bakari Mapelu due to lackluster performance. BAM had always been a high performing organisation and the Board felt that Bakari Mapelu lacked the right skill set, decision style and values to steer BAM forward. In Fatuma Apio, the Board saw a leader with the “right package” of skills, values and abilities and a person who could build a strong leadership team in the organisation. To them, Fatuma Apio was an idealist who had an unquenchable thirst for learning and growing. They knew that she would influence the other leaders and employees of BAM to follow suit. This would then result in a healthy organisational culture necessary for the success of BAM. Fatuma Apio believed in and implemented Elton Mayo’s Human Relations Movement Theory at BAM. Without a doubt, Fatuma was a transformational leader. Fatuma Apio’s farewell party was quite emotional since members of staff felt like one big united family, and her separation with BAM was unimaginable. Fatuma had a knack for recruiting the right staff and developing them to their highest potential. She had what it took when it came to staffing. No wonder BAM became so successful during her tenure to the envy of many organisations. She ensured that BAM had a progressive staffing policy. The policy encouraged employees to have a work life balance. In her final speech, she narrated her experience as a newly appointed CEO where most of her time was spent at the workplace. “I used to work late into the night and during weekends at the expense of my young family. This can be challenging to many of us and requires a lot of discipline and a solid support system. Luckily, I had great support from my husband. I highly discourage such a work ethic. You should always create time for your families. I know of situations where, such a work ethic has led to conflicts at the family level and the repercussions experienced at the workplace,” she told the employees. As one of the few women CEOs, and just in her 40s, her advice to young women aspiring to be top executives is simply to acquire knowledge and competence, saying it is the best investment one can make. “Knowledge will aid you in making great strides in all the areas you are passionate about. Most importantly, self-discipline and responsibility shall steer you to the right path,” she says. What she likes most about the industry now is that more women are taking up leadership positions than ever before. “Unfortunately, the game is already rigged, particularly on what is expected of women in leadership and their ability to hold such positions,” she added. Fatuma encouraged women employees of BAM not to be bound by defined spaces. They should shine in their talent and skills to make a difference. “This concept continues to be demonstrated everyday as more women take up C-suite roles, more so in traditionally, male-dominated sectors, such as manufacturing,” she said. Fatuma added that, “BAM started the Women in Manufacturing Programme to provide a space for women to venture into the manufacturing space. We aspire to see more women participate in the sector in senior leadership roles, as owners and founders, and for young girls to see themselves as future industrialists”. According to her, there were times when the issues she wanted to change took too long to materialise, but she remained steadfast. This taught her to be patient and resilient. “I have learnt that challenges fuel you to become more innovative,” she concluded. Required: 1. Fatuma Apio believed in and implemented Elton Mayo’s, Human Relations Movement theory at BAM. With reference to the above statement, describe FIVE actions that Fatuma Apio may have taken, to implement the theory in her organisation. (10 marks) 2. Bernard M. Bass developed the transformational leadership theory in 1985 as a way to describe the psychological mechanisms that are used by leaders. With reference to the above statement: Explain SIX personal traits that Fatuma Apio possesses that enable her to be regarded as a successful transformational leader. (6 marks) Examine FOUR elements that make up a transformational leader, which came to be known as the 4 Is. (8 marks) 3. Enumerate SIX principles that BAM might have taken into consideration while developing a staffing policy. (6 marks) 4. Fatuma Apio encouraged BAM employees to always create time for their families to avoid conflicts. Conflicts in organisations also occur between line and staff management. With reference to the above statements, assess FIVE possible sources of conflict between line and staff management of BAM. (10 marks) (Total: 40 marks) QUESTION TWO 1. Identify FIVE reasons why a business organisation should write a business plan. (5 marks) 2. Organisational success is dependent on the interaction and interdependence of internal and external system components. With reference to the above statement, describe FIVE components

TUESDAY: 6 December 2022. Afternoon Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings. Any assumptions made must be clearly and concisely stated. Do NOT write anything on this paper. RATES OF TAX (Including wife’s employment, self-employment and professional income rates of tax). Year of income 2021. QUESTION ONE 1.  Explain the following types of funds: The contingency fund. (2 marks) The equalisation fund. (2 marks) 2. An accounting officer of a procuring entity is empowered at any time, prior to notification of tender award, to terminate or cancel procurement or asset disposal proceedings without entering into a contract. Highlight SIX circumstances under which the procurement or asset disposal proceedings may be terminated or cancelled as provided under the Public Procurement and Asset Disposal Act, 2015. (6 marks) 3. Outline SIX contents that should be included in development plan prepared by every county government as specified under Section 126 (1) of the Public Finance Management Act, 2012. (6 marks) 4. “Each year, the county treasury shall submit to the county assembly a statement setting out the debt management strategy of the county government”. With reference to the above statements, identify FOUR items that the county treasury should include in the statement. (4 marks) (Total: 20 marks) QUESTION TWO 1. The Revenue Authority is empowered to undertake different types of tax audit to ascertain the actual tax liability of the tax payers involved. The tax audit may be triggered by general or specific details that come to the attention of the Commissioner. With reference to the above statement, suggest FOUR triggers of PAYE audit. (4 marks) 2. A contracting authority is empowered to use direct procurement method as one of the Public Private Partnerships (PPPs) procurement methods by the Act. In relation to the above statement, summarise SIX circumstances under which a contracting authority could use direct procurement as one of the PPPs procurement method. (6 marks) 3. The following are the transactions of Starlite Traders for the month of August 2022. The business is registered for value added tax (VAT) purposes: Additional information: 1. The reported sales to unregistered customers include goods sold to a customer in South Sudan of Sh.536,000. 2. An invoice of Sh.160,000 issued to Wema Traders has been omitted from the records during the month. 3. Motor vehicle fuel and repairs and maintenance relates to the van used to supply goods to customers. 4. Water bill related to the water supplied by the county government during the month. All transactions are inclusive of value added tax (VAT) at the standard rate of 16% where applicable. Required: A value added tax (VAT) account for the month of August 2022 for Starlite Traders. (10 marks) (Total: 20 marks) QUESTION THREE 1. Explain the term “Certificate of Origin” as used under customs and excise taxes. (2 marks) 2. Identify FOUR categories of information the Commissioner should include in the default assessment sent to the taxpayer. (4 marks) 3. Henry Mwala who holds a dual citizenship, had been living in Denmark since September 2014. He returned to the country on 17 December 2020 and opened a hardware shop on 2 January 2021. On 1 July 2021, he secured a formal employment with Bestfreight Ltd. a logistic company as a fleet manager. He provided the following information relating to his income for the year ended 31 December 2021: 1. Basic salary Sh.180,000 per month (PAYE Sh.46,000 per month). 2. He was paid overtime amounting to Sh.30,000 per month and risk allowance of Sh.25,000 per month during the year. 3. The employer provided him with meals worth Sh.5,000 per month. 4. He received house allowance of Sh.60,000 per month. 5. Up to 30 September 2021, he used his personal car for official duties and the employer reimbursed a monthly mileage allowance of Sh.40,000. 6. On 1 October 2021, he was provided with a saloon car of 2400cc purchased by the company in year 2019 at a cost of Sh.2,000,000. 7. He was out of office on official duties for five days and received a per diem of Sh.6,000 from the employer. 8. The company paid school fees of Sh.80,000 for each of his three children during the year. This was included in the employer’s books of accounts. 9. The employer bought a Sh.120,000 air ticket to facilitate Henry Mwala to visit the rest of his family in Denmark during his annual leave. 10. With effect from 1 July 2021, he contributed Sh.15,000 (monthly) as pension contribution and Sh.92,000 for life insurance annual premium respectively. 11. He bought a residential house on 1 September 2021 through mortgage of Sh.6,000,000 provided by Excel Bank Ltd. at an interest rate of 16% per annum. He moved into the house on 2 October 2021. 12. The net loss from the hardware shop during the year amounted to Sh.370,000. This was after deducting the following: Required: Determine total taxable income for Henry Mwala for the year ended 31 December 2021. (12 marks) Compute tax payable (if any) from the income computed in 3 above. (2 marks) (Total: 20 marks) QUESTION FOUR 1. Explain the term “Railway development levy” as used in taxation. (2 marks) 2. Highlight THREE benefits derived by member countries of the East African Community from use of the Single Customs Territory. (3 marks) 3. Identify THREE objectives of fiscal policies adopted by most developing countries. (3 marks) 4. Leeds Manufacturing Ltd. commenced operations on 1 January 2021 after incurring the following expenditure: Additional information: 1. The factory building includes the cost of a showroom and a retail shop of Sh.1,850,000 and Sh.1,690,000 respectively. 2. A perimeter wall was constructed at a cost of Sh.4,200,000 and utilised from 1 October 2021. 3. The company acquired the following additional assets during the year ended 31 December 2021: 4. In June 2021, one of the saloon cars was involved in an accident and the insurance company paid Sh.3,000,000 as compensation.