AUDIT AND INTERNAL REVIEW

QUESTION 1

(a) Explain the concept of independence of an Auditor.

(2 marks)

(b) How can the independence of an Auditor be compromised?

(5 marks)

(c) You are the auditor in charge of Asem Beba Dabi Enterprise whose volume of sales has

been reducing consistently over the past five years. During the current year audit, you

noticed that the company has adopted a new strategy which has enabled them to increase

sales by 500%.

A competitor of the company has approached you to enquire about the strategy adopted

by the company.

Required:

i. Explain the reasons why you cannot disclose to the competitor the new strategy adopted

by Asem Beba Dabi.

(2 marks)

ii. Under what circumstances will you be able to disclose the strategy? (3 marks)

(d) Explain the concept of “expectation gap” and highlight at least two responsibilities each

of Directors and Auditors toward the financial statements of an organization.

(8 marks)

(Total: 20 marks)

QUESTION 2

(a) Distinguish between compliance testing and substantive testing.

(4 marks)

(b) Identify five (5) stakeholders that use both the Auditor’s report and the Management

Letter and differentiate between an Audit Report and a Management Letter.

(10 marks)

(c) Describe how you will substantiate Trade Receivables’ Balances during an audit.

(6 marks)

(Total: 20 marks)

QUESTION 3

(a) Mantua Limited is a company registered under the Ghana Companies Code 1963 Act

179. The company is into the manufacture of plastics. The company for some time has

been in financial difficulties.

Required:

In connection with ‘Going Concern’ and based on Auditing Guidelines for consideration, list the

factors and assign reasons that may indicate that Mantua Limited may not be a ‘Going Concern’.

(15 marks)

(b) Explain the term “materiality” to an interviewee who has approached you for assistance

before his interview.

(5 marks)

(Total: 20 marks)

QUESTION 4

A professional accountant is required to comply with certain fundamental principles of Ethics.

Required:

(a) State and explain the fundamental principles of Ethics that professional accountants are

required to comply with.

(8 marks)

(b) Compliance with the fundamental principles of Ethics may potentially be threatened by a

broad range of circumstances.

Required:

State the broad categories of such threats. (5 marks)

(c) Explain Analytical Review Procedures (2 marks)

(d) Indicate the objectives of applying analytical review Procedure at each stage in an audit.

(5 marks)

(Total: 20 marks)

QUESTION 5

(a) Explain the term ‘Outsourcing’ and list three (3) advantages and three (3) disadvantages

of Outsourcing an Internal Audit Department.

(10 marks)

(b) ISA 230: Audit Documentation provides guidance to auditors in respect of audit working

papers.

Required:

Identify the forms of audit working papers and list factors which affect the form and content of

audit working papers.

(6 marks)

(c) There are a number of key procedures which auditors should perform if they wish to rely

on internal controls and reduce the level of substantive testing they perform.

Briefly explain the procedures for a walk-through test.

(4 marks)

(Total: 20 marks)

PRINCIPLES AND PRACTICE OF TAXATION

QUESTION 1

Explain the following as appears in the Internal Revenue Act, 2000 (Act 592), as amended as

well as in practice, giving examples where appropriate.

(a) Carry forward of losses.

(b) Tax Rebates

(c) Set-off and Refunds

(d) Notional Allowance

(20 marks)

QUESTION 2

Yaw Manu is a teacher of a Senior High School, who teaches Agricultural Science. He has his

own private poultry farm near the school.

He also has a bakery business which is managed by his wife. The following are details of his

Annual Returns.

YEAR TO SALARY FARMING BAKERY CAPITAL CAPITAL

ALLOWANCE ALLOWANCE

FARMING BAKERY

GH¢ GH¢ GH¢ GH¢ GH¢

31/12/09 12,000 (5,000) 8400 400 200

31/12/10 14,000 200 (1,000) 600 400

31/12/11 16,000 8,000 (500) 400 300

31/12/12 18,000 15,000 1,000 1,300 200

He does part-time teaching and received the following net payments:

GH¢

2009 = 300

2010 = 480

2011 = 500

2012 = 600

He is married with 4 children, all attending Schools in Ghana. He contributes to Social Security.

Required:

Determine his chargeable incomes for all relevant years. (20 marks)

QUESITON 3

Solar Systems Limited has been in business for several years preparing accounts to 30th

September each year. Below is an extract from the Statement of Profit and Loss Account and

notes for the year ended 30th September, 2013.

GH¢ GH¢

Gross Profit b/f 282,000

Less Expenses:

Salaries and Wages 74,200

Directors’ Emoluments 16,400

Repairs and Maintenance 28,000

Electricity and Water 15,400

Subscriptions and Donations 3,200

Bank Charges 400

Audit Fees 600

Depreciation 62,000

Legal Charges 2,500

Office Rent 9,000

Field Expenses 38,600

Sundry Outgoings 1,800

Net Profit 29,900 _______

282,000 282,000

Notes to the Accounts:

1. Repairs and Maintenance (28,000):

Vehicles 8,600

Machinery 3,200

Equipment 1,800

New Security Gate 14,400

28,000

2. Subscription and Donations (3,200)

Periodicals/Newspapers 400

Funeral Donations (Staff) 2,300

X’mas gifts to Landlady 500

3,200

3. Legal Charges (2,500):

Defense of Trade mark 500

Fines and Penalties 1,000

Collection of Trade Debts 400

Formation of Subsidiary Company 600

2,500

4. Field Expenses (38,600)

2 New Nissan Pickups 24,000

Casual Labour 4,600

Erection of Concrete stand for Fixtures 6,600

Incidental Expenses 3,400

38,600

5. Residual Values of Assets B/F (1/10/11)

Class 1 = 4,200

Class 2 = 16,800

Class 4 = 8,200

6. Additions to Assets

Computers 16,000

2 Pickups 24,000

Furniture 800

Plant and Equipment 2,400

7. Capital Allowance B/F 23,000

Required:

Compute the chargeable income of the company. (20 marks)

QUESTION 4

(a) Ataa Maame manufactures aluminum pots and pans at Kokompe in Accra. She has been

in this business for over 10 years. In 2009 she obtained a bank loan to expand the

business, having received orders from Burkina Faso and Mali.

She had a factory and warehouse at Kokompe which cost GH¢15,000 to build in 2006.

She has two delivery trucks she bought in 2006 for GH¢1,500 each. The residual values

of the trucks at the end of 2008 was GH¢1,200. She sold the factory and warehouse at

Kokompe for GH¢30,000 in July 2010.

She also charged the new buyer GH¢500 as goodwill. She sold the delivery trucks for

GH¢1,000 each and the stocks of products for GH¢15,000.

By June 2011 she had put up a new factory and warehouse at Kasoa costing GH¢20,000.

The cost of conveying machines and other business assets to Kasoa amounted to

GH¢800.

Required:

Calculate any capital Gains Tax payable. (12 marks)

(b) Identify and comment on any three basic differences between Income Tax and Value

Added Tax.

(8 marks)

QUESTION 5

Below is an extract of the Income Statements of Bella and Belinda, two sisters who have been in

business for the past three years. They import and sell second hand goods such as fridges,

television sets and sound systems. The accounts are for year ended 31/12/12.

GH¢ GH¢

Manager’s Salaries 12,000 Gross Profit b/d 251,700

Storekeepers and Casuals 206,000 Sale of Shares 2,000

Rent and Rates 1,500 Net Dividend 500

Theft of Goods 600

Interest on Loan 1,120

Depreciation 860

Repairs 1,720

Vehicle Expenses 4,250

Court Fine 400

Donations 4,000

Overseas Travel 2,000

Exchange Loss 750

Net Profit 19,000

---------- ---------

254,200 254,200

Notes to Accounts:

1. Bella is full time Manageress. She receives GH¢1,000 a month.

2. Theft of goods:

Goods valued at GH¢600 were left in front of the store. They were stolen during the

night. There is no watchman.

3. Depreciation is on a car used by the partners. The residual value of this vehicle at end of

year was GH¢2,500.

4. Repairs: The amount is for re-enforcement of steel doors.

5. The driver of the vehicle was fined in court for failure to renew insurance and road

worthy certificates.

6. Belinda travelled overseas to attend her daughter’s wedding. The cost was GH¢2,000.

7. The partners import their goods from Germany. They paid for the cost in advance

through their bankers, based on prevailing rates. However, the transfer delayed due to

lack of foreign exchange. By the time the transfer was effected the cedi had depreciated.

Hence the Exchange Loss of GH¢750.

8. Donation is made up as follows:

(a) Peoples Popular Party = GH¢2,000

(b) Funeral and Outdoorings = GH¢2,000

The sisters share profits and losses equally.

Required:

Compute the chargeable income of each partner.

(20 marks)

BUSINESS AND CORPORATE LAW

SECTION A: BUSINESS LAW

Answer two (2) questions from this section

QUESTION 1

(a) Briefly outline the sources of law in Ghana. (10 marks)

(b) Explain the circumstances under which a minor would be bound by a contract.

(10 marks)

QUESTION 2

Explain the remedies available to an injured party for breach of contract. (20 marks)

QUESTION 3

(a) Explain the circumstances under which a buyer may be entitled to reject goods.

(10 marks)

(b) Generally a buyer may not reject goods which he has accepted. Explain the circumstance

under which a buyer would be deemed to have accepted goods.

(10 marks)

SECTION B: COMPANY LAW

Answer two (2) questions from this section

QUESTION 4

The Registrar of Companies is empowered to call on a company to produce for his inspection all

or any of the books of the company. Explain the circumstances under which the Registrar may

exercise such powers.

(20 marks)

QUESTION 5

After a company has been incorporated, it has to apply for a certificate to commence business

before it can start operating formally. Outline the information that has to be provided in the

returns filed with the Registrar of Companies.

(20 marks)

QUESTION 6

Outline the procedure for the Appointment and Retirement of Directors of a public company.

(20 marks)

SECTION C: PARTNERSHIP LAW

Answer one (1) question from this section

QUESTION 7

The Incorporated Private Partnership Act, 1962 (Act 152) defines a partnership as an association

of two or more individuals carrying on business jointly for the purpose of making profit.

Explain the exceptions to this definition.

(20 marks)

QUESTION 8

(a) Under the Incorporated Private Partnership Act, 1962 (Act 152), a partnership firm is

expected to be registered with the Registrar.

Outline the information that should be provided in the statement in the prescribed form?

(10 marks)

(b) Explain the circumstance under which the Registrar may refuse registration of a

partnership.

(10 marks)

QUANTITATIVE TOOLS IN MANAGEMENT

QUESTION 1

The following statements are guidelines for constructing a Linear programming (LP) model.

(a) Collect date for all parameters of the model.

(b) choose a numerical measure of effectiveness for the objective function, for example,

tonnage of cocoa carried.

(c) Identify and represent all the constraints as linear expressions involving the decision

variables, e.g. A+B=30.

(d) Understand the problem.

(e) Represent this measure of effectiveness as a linear expression involving the decision

variances. For example, maximize Z = 2A + 3B.

(f) Identify the decision variables. For example, the number of Type B vehicles to be

employed for carrying cocoa to Takoradi.

Required:

(i) Rearrange statements (a) to (f) in appropriate order. (3 marks)

(ii) A company produced toilet soaps for the local market. Each toilet soap is manufactured

from two different raw materials (M1 and M2) of which 50 units and 40 units respectively

are available. Production of toilet soaps takes place in three separate departments. Raw

materials required per production and the contribution per department are given below:

Departments Raw Material

M1 M2

Contribution

GH¢

1

2

3

32 24

25 45

3 8

5

6

1

Required:

(a) Formulate the problems as a Linear programming problem. (4 marks)

(b) Formulate the dual of the Linear programming problem. (3 marks)

(c) Solve the dual problem in (b) above graphically. (5 marks)

(d) Interpret the solution of the dual problem. (5 marks)

(Total: 20 marks)

QUESTION 2

(a) Sate four properties of the normal Probability density.

(4 marks)

(b) Consider an investment whose return is normally distributed with a mean of 10% and a

standard deviation of 5%.

Required:

(i) Determine the probability of losing money.

(4 marks)

(ii) Find the probability of losing money when the standard deviation is changed to 10%.

(4 marks)

(iii) Comment on your results in (i) and (ii). (2 marks)

(c) During summer the demand for electric fans at a large home improvement store is quite

strong. The company tracks inventory using a Computer System so that it knows how

many fans are in the Stores at any time. The policy is to order a new shipment of 250

fans when the inventory level falls to the re-order point of 150. However, this policy has

resulted in frequent shortages resulting in lost sales because both lead time and demand

are highly variable.

The manager would like to reduce the incidence of shortage so that only 5% of orders

will arrive after inventory drops to 200 (resulting in a shortage). This policy is expressed

as a 95% service level. From previous periods the company has determined that demand

during lead time is normally distributed with a mean of 200 and a standard deviation of

50.

Required:

Calculate the re-order point. (6 marks)

(Total: 20 marks)

QUESTION 3

(a) Distinguish between Maximum and Minimum turning points of a function of one

variable.

(4 marks)

(b) A manufacturing firm requires 40,000 units of a particular item annually. The item is

packed in boxes of 20 units each. The ordering cost is GH¢45 per order and the carrying

costs are GH¢2 per box.

Required:

(i) Determine the variable cost of ordering X number of boxes. (4 marks)

(ii) Use differential calculus to determine the value of X that will minimize the variable cost.

(10 marks)

(iii) Hence, compute the minimum variable cost.

(2 marks)

(Total: 20 marks)

QUESTION 4

Statistics show that at a certain university, 70% of the students who live on campus during a

given semester will remain on campus the following semester, and 90% of the students living off

campus during a given semester will remain off campus the following semester. Let X and y

denote the number of students who live on and off campus this semester, and let U and V

be the corresponding numbers for the next semester. Then:

0.7x + 0.1y = u

0.3 + 0.9y = v

Required:

(i) Write this system of equations in matrix form. (3 marks)

(ii) Solve the resulting matrix equation for x (7 marks)

y

(iii) Suppose that out of a group of 9,000 students, 6,000 currently live on campus and 3,000

live off campus. How many lived on campus last semester?

(6 marks)

(iv) From (iii) above, how many will live off campus next semester? (4 marks)

(Total: 20 marks)

QUESTION 5

(a) State and explain two advantages and two disadvantages of Period Review Inventory

System.

(4 marks)

(b) A departmental store in Ghana sells 25,000 pairs of socks annually. The supplier of the

departmental store offers quantity discount in the following price and quantity ranges.

Quantity Price (GH¢)

1-999 2.50

1000 – 1749 2.00

1750 – 2499 1.50

2500 and over 1.00

It cost the departmental store GH¢20 to place an order and inventory carrying costs is 20%

of the value of the item.

Required:

(i) Calculate the Economic Order Quantity for each price level and determine its feasibility.

(6 marks)

(ii) Calculate the total cost (Purchase cost + Inventory cost) of all quantity levels.

(6 marks)

(iii) Determine the optimal purchasing policy for the departmental store.

(2 marks)

(iv) Calculate and describe the inventory cycle of the optimal purchasing policy of the

departmental store.

(2 marks)

(Total: 20 marks)

QUESTION 6

An 85-page document has just been proof-read and the number of errors found on each page

recorded as below:

Number of errors Number of pages

0 32

1 28

2 18

3 4

4 3

Required:

(a) Calculate:

(i) the mean, median, mode. (4 marks)

(ii) the 1st & 3rd quartiles (3 marks)

(iii) the inter-quartile range (5 marks)

(iv) Standard deviation (5 marks)

(b) Comment on the skewing of the distribution of errors. (3 marks)

(Total: 20 marks)

QUESTION 7

The busiest time of the day at Nayoh Restaurant is between 11:00 a.m. and 2:00 p.m. Nayoh

needs assistance to determine the number of employees it needs during each hour of the 3-hour

period. The following are the number of customers served at Nayoh Restaurant during each hour

of the lunch period for the past 5 week days.

Day 11-12 12-1 1-2

1 90 125 87

2 76 131 93

3 87 112 99

4 83 149 78

5 71 156 83

Required:

(i) Calculate the centred 3-day moving average. (4 marks)

(ii) Calculate the centred 5-day moving average. (5 marks)

(iii) Using the centred 5-day moving average and least square regression, determine the linear

trend line.

(5 marks)

(v) Use the multiplication model to calculate estimates of the seasonal adjusted number of

customers by adjusting the actual number of customers by average seasonal variations.

(6 marks)

(Total: 20 marks)

THE INSTITUTE OF CHARTERED ACCOUNTANTS [GHANA]

AUDIT AND INTERNAL REVIEW

NOVEMBER 2013 SOLUTIONS

QUESTION 1

A]

The concept of independence requires that the auditor should not put himself in a position that

will compromise his ability to assert his professional authority on the audit. Therefore the

auditor must always approach his work with integrity and objectivity and the approach must be

in a spirit of independence of mind.

B]

There are a number of issues that can compromise the independence of an auditor. These

include the following:

i. Undue dependence on an audit client. If the fees from one client or group connected

clients exceed 15% of gross practice income.

ii. Family or other personal relationships. If the auditor has personal or family relationship

with the client that can adversely affect the auditor’s ability to assert his professional

authority.

iii. Beneficial interest in shares and other investments. If the partners, their spouse and

children have shares or other form of investment in the client’s business. Also if a

member of the audit team or a person connected to him has beneficial interest in the audit

client.

iv. Loans to and from clients. If the audit firm, partners or staff or persons closely connected

to them advances loans or receive loans from the client. Guarantee for loans can also

adversely affect the auditor’s independence.

v. If the firm, partners, staff or persons closely connected to them accept goods and services

with values significant enough to influence their judgment. Acceptance of undue

hospitality can also affect the auditor’s independence.

C]

i. The code of ethics and professional rules of conduct of auditors requires auditors to keep

the affairs of their client confidential and not to disclose them to any other party without

the client’s instructions.

ii. Disclosure can only be made under the following circumstances.

a. When the client authorizes the auditor to disclose.

b. When the audit is compelled by court of competent jurisdiction

c. When the disclosure is in the interest of the state. This is where there is issue relating to

fraud or crime.

D]

The expectation gap explains the gap between the public understanding of the responsibility of

an auditor and the auditor’s understanding of what his responsible are. The public is of the view

that auditors are responsible for detection of fraud. Whereas the auditors believe that it is not

their responsibility to detect fraud.

Indeed it is not the auditor’s responsibility to detect fraud but the auditor has a responsibility to

plan his audit and also carry out his duty with reasonable care and skill in a way that if there is

fraud or material misstatements the audit processes will disclose them.

Directors of an organization are responsible for the preparation of the financial statements and

the disclosures made in them.

Auditors of an organization have the responsibility to carry out independent review of the

financial statements and express an opinion as to whether the financial statements portray a true

and fair view of the state of affairs in the organization.

QUESTION 2

A]

Compliance testing is conducted on the working of controls in the system so as to obtain

reasonable assurance that the internal controls on which the auditor wishes to rely are

functioning both properly and throughout the period. With compliance testing, the auditor is

particularly concerned with whether or not the system is operating in accordance with

specifications laid down by the directors.

Substantive testing procedures on the other hand are designed to prove accuracy of balances in

the financial statements or the accounting records. It includes review of balances, vouchers,

invoices and supporting documents. Substantive testing is carried out irrespective of the

adequacy of the system of controls. However, the extent to which the substantive test could be

carried out will be determined by the opinion formed on the reliability or otherwise of the system

of internal control in operation

B]

An auditor’s report is a report issued by auditors on financial statements of an organization for a

period under consideration. The report declares the auditors’ opinion on the financial statements.

It usually forms part of the published financial statements.

Management letter on the other hand, is a report containing details of internal control lapses that

were identified by the auditors during the audit. It usually identifies the control lapses and

provides recommendations as to how the identified lapses can be addressed. It is usually specific

to the period under consideration.

Shareholders rely on auditor’s report to convince themselves that the financial statements is a fair

representation of the happenings in the company. The audit report provides them with the

assurance that their investments are being prudently managed.

Prospective shareholders rely on auditor’s report to decide on whether to invest in the company

in question or not.

Analysts rely on the auditor’s report to decide on the financial state of the company in question.

Employees rely on the auditor’s report to convince themselves that the company is operating as a

going concern and that they have job security.

Management rely on the management letter to abreast themselves with internal control lapses

and implement the recommendations provided by the auditors in the management letter.

C]

Trade Debtors

The auditor’s main objective of auditing Trade Debtors is to form an opinion as to the

ownership, existence, accuracy, collectability and disclosure.

i. The auditor will have to obtain the list of debtors and their respective balances which

should total up to the amount disclosed in the financial statements.

ii. The auditor should circularize the debtors to confirm the accuracy of balances indicated

against each of them.

iii. The auditor should also review samples of transactions between the company and the

debtors and their supporting documents to confirm that the debt arose as a result of an

unpaid transaction between the company and the debtor.

QUESTION 3

A]

There are many factors which could indicate that Mantua Ltd was not a going concern.

Some of the factors are:

i. Reduction in Liquidity

This is shown by growing level of creditors, worsening gearing and current ratios and increasing

rate of overdraft. Liquidity problems also arising as a result of trading losses.

ii Inability to Generate Sufficient Profits

Any company that may not be able to generate reasonable profit obviously would have going

concern problems as it may be draining it existing capital through the making of losses.

iii. Taking of Extended Credit by Customers

The most likely cause of this would be poor credit control on the part of the company. Excess

credit would reduce working capital and might have a ‘knock on’ effect if the company found

itself unable to meet its own bills as they fall due.

iv. Over-Trading by the Company

If sales are increasing too rapidly the company may encounter an equally rapid increase in the

amount invested in stocks and debtors. A manufacturing company like Mantua may also find

itself buying more plant and equipment in an effort to meet demand. All these factors will have

the effect of draining liquid funds from the company with the result that it may be unable to pay

for the good it requires to carry on.

v. Loss of Key Customers

If these customers account for a major part of turnover of the company, then loss of them could

create serious problems unless alternature outlets are found. Company would have insufficient

revenue while fixed costs remain the same.

vi. Adverse Movements in Exchange rate

This has the tendency of affecting companies with substantial imports where the home currency

(GHS) is weak or substantial exports where the home currency (GHS) is strong against other

foreign currencies.

vii. Material Shortage

This is very essential to Manufacturing processes. This could happen through the failure of a

major supplier consistently failing to fulfill its obligation to supply. A company that cannot

produce goods to sell has no future.

viii. Replacement of Fixed Assets

Assets which are nearing the end of their useful lives might be necessary at a time when finance

is tight. This may have serious impact upon the company’s ability to maintain capacity levels or

even to continue business at all.

ix. Changes in Policy

A decision to lease rather than outright purchase of new fixed assets. These may indicate going

concern difficulties, particularly whereas is frequently the case, the finance charges for such

lease arrangements are higher than they would have been using a conventional bank loan.

x. Redemption of Loan Capital

This may originally have been part of long term borrowings and redemption is at a time when

company is unable to finance this from its own resources. If alternative source of finance are not

readily available, the company may come under quite severe financial pressure.

B]

Materiality

Solution not provided, will have to be provided during coordination.

QUESTION 4

A]

A professional accountant is required to comply with the following fundamental principles:

Integrity - A professional accountant should be seen to be straightforward and honest in all

professional and business relationships.

Objectivity - A professional accountant should not allow bias, conflict of interest or undue

influence of others to override professional or business judgments.

Professional competence and due care – A professional accountant has a continuing duty to

maintain professional knowledge and skill at the level required to ensure that a client or

employer receives competent professional service based on current developments in practice,

legislation and techniques.

A professional accountant should act diligently and in accordance with applicable technical

and professional standards when providing professional services.

Confidentiality – A professional accountant should respect the confidentiality of information

acquired as a result of professional and business relationships and should not disclose any

such information to third parties without proper and specific authority unless there is a legal

or professional right on duty to disclose. Confidential information acquired as a result of

professional and business relationship should not be used for the personal advantage of the

professional accountant on third parties.

Professional Behaviour – A professional accountant should comply with relevant laws and

regulations and should avoid any action that discredits the profession.

B]

Compliance with the fundamental principles may be threatened by following broad range of

threats:-

Self-interest threats - This may occur as a result of the financial or other interest of a

professional accountant or an immediate or close family member.

Self-review threats – This may occur when a previous judgment has to be re-evaluated by the

professional accountant responsible for that judgment.

Advocacy threat – This may occur when a professional accountant promotes a position or

opinion to the point that subsequent objectivity may be compromised.

Familiarity threats – This may occur when, because of a close relation a professional

accountant becomes too sympathetic to the interest of others.

Intimidation threats – This may occur when a professional accountant may be not act

objectively by threats, actual or perceived.

C]

Analytical procedures consist of analysis of significant ratios and trends including the resulting

relevant information or which deviate from predictable amounts. Analytical procedures are the

analysis of relationships:

Between items of financial data or between items of financial and non-financial data,

deriving from the same period.

Between comparable financial information derived from different periods.

To identify consistencies and predicted patterns or significant relationships, and the results of

investigations

D]

Objectives

At Planning Stage

To improve the auditors understanding of the enterprise.

To identify areas where recorded value varies from the auditor’s expectations, enabling him

to direct audit resources accordingly.

To help determine the nature, timing and extent of text of the details of transactions and

balances

At Substantive Test Stage

The use of analytical procedures of substantive tests is meant to ensure the completeness and

material accuracy of the transactions.

To corroborate evidence obtained from test of details of transactions and balance

At the Review Stage

To form an overall conclusion as to whether the financial statements as a whole are

consistent with the auditor’s knowledge of the entity’s business.

To discover areas or problems which need further audit investigation

QUESTION 5

A]

Outsourcing

“Outsourcing” is subcontracting a process to a third party company that is, purchasing the

service externally. Services that are typically outsourced include internal audit, accountancy and

payroll functions.

Three Advantages of Outsourcing Internal Audit

Service provider has expert knowledge and can provide skilled staff.

Cost savings in terms of employee salaries, training costs, recruitment expenses.

Immediate internal audit department provided.

Three (3) Disadvantages of outsourcing Internal Audit

Independence and objectivity issues of internal audit department are provided by same firm

as external auditors.

Cost may be high enough to force entity to choose not to have an internal audit department at

all.

Frequent staff changes resulting in poor quality service being provided due to lack of

understanding of client’s systems and operations.

B]

Factors affecting the form and content of audit working papers

The size and complexity of the entity

The nature of the audit procedures to be performed

The identified risks of material misstatement

The significance of the audit evidence obtained

The nature and extent of exceptions identified

The need to document a conclusion or basis for a conclusion not readily determinable from

documentation of work performed or audit evidence obtained

The audit methodology and tools used

C]

i. Walk-through tests

Walk-through tests are performed by the auditors to confirm that their recording and

understanding of the system is correct. They are often performed as the recording of the system

takes place or in conjunction with the test of controls.

The process involves the tracing of a sample of transactions from the start of the operating cycle

to the end and vice-versa. For example a sales transaction could be traced from the initial order

through to the entry in the nominal ledger accounts.

THE INSTITUTE OF CHARTERED ACCOUNTANTS [GHANA]

PRINCIPLES OF TAXATION

NOVEMBER 2013 SOLUTIONS

QUESTION 1

CARRY FORWARD OF LOSSES

This provision applies to business in Agricultural, Mining and Manufacturing. Under the

provision losses uncarried in one year are allowed to be carried forward for five years. If more

than one loss is uncarried, losses are carried forward in the order in which they occur.

B]

TAX REBATES

These are intended to boost investment in priority areas of the economy. Policy makers believe

the rebates will attract much needed capital to these areas.

Examples are the following:

(i) Export of non-traditional products = 8%

(ii) Hotel industry = 20%

(iii) Companies which engage in agro processing and companies which produce cocoa by-

products on commercial basis. The rates are as follows:

Accra / Tema = 10%

North, Upper East / West = 0%

Other Regional Capitals = 10%

Outside Regional Capitals = 0%

(iv) Banks which give loans for agriculture = 20%

(v) Companies listed on the Stock Exchange 25%

(vi) Manufacturing companies located in the following area

Accra / Tema = NIL

Regional Capitals = 25%

All other places = 50%

C] SET-OFF AND REFUNDS

The Income Tax Law prescribes general withholding taxes at source. Examples are taxes

deducted at source from salaries and allowances (P. A.Y.E.) and 5% deductions from contract

sums. These up front deductions are not final taxes; they are just payments on account.

When a taxpayer’s final tax is determined, these withholding taxes are set-off or credited against

actual tax liabilities.

Where a taxpayer has a liability under a tax type and an over payment under another tax type, the

taxpayer may apply to the Commissioner General for a set-off and when there is any excess of

over payment the taxpayer may apply for a refund.

D] NOTIONAL ALLOWANCE

If businesses which enjoy tax holidays have depreciable assets, these assets are depreciated

normally until the end of the tax holiday period.

The allowances so calculated are not carried forward after the tax holiday period. Capital

allowances are calculated on the residual values of the assets at the end of the exemption period.

Allowances calculated during the exemption period are called notional allowances and ignored.

QUESTION 2

2009 GH¢ GH¢

Salary 12000

Bakery 8400

Less Capital Allowance 200 8200

20200

Less Reliefs

Marriage 200

Child Education (3 x 200) 600

SSF (5.5% x 12,000) 660 1,460

C. l. = 18.740

2010

Salary 14000

Farming 200

Less b/f 5000

Loss cf 4800

Total Income 14000

Less Reliefs

Marriage 200

Child Education 600

SSF (5.5% x 14,000) 770 1,570

C. l. = 12,430

2011

Salary 16000

Farming 8000

Less loss b/f 4,800

Less Capital Allowance 1,400 6200 1800

17800

Less Reliefs

Marriage 200

Child Education 600

SSF (5.5% x 16,000) 800 1,680

C. l. = 16,120

2012

Salary 18,000

Add farming 15000

Less Capital Aallowance 1300 13,700

Add bakery 1000

Less capital allowance 900 100

31,800

Less Reliefs

Marriage 200

Child Education 600

SSF (5.5% x 18,000) 990 1,790

C. l. = 30,010

QUESTION 3

GH¢

Net Profit as per accounts 29,900

Less : Rent

29,900

Add :

New security gate 14,400

X’mas gift (landlady) 500

Depreciation 62,000

Fines and penalties 1,000

Formation of subsidiary 600

Pick-ups 24,000

Concrete stands 6,600 109,100

Adjusted Profit 139,000

Less: Capital Allowance

B/f 23,200

Current 24,700 47,900

91,100

Capital Allowance Computation

Class I

(40%)

Class 2

(30%)

Class 4

(20%)

Totals

B/f 4,200 16,800

24,000

11,400

Adds 16,000 3,200 24,000

20,200 20,000

40,800

32,200

11,400

Depreciation Allowance 8,080 12,240 2,280

c/f 12,120

14,000 25,760 24700

QUESTION 4

A] Capital Gains

GH¢

Realized Sum = 30,000

Less Utilized (Factory and warehouse) = 20,000

10,000

Add Goodwill 500

Capital gain = 10,500

Less Annual exemption 50

10,450

Tax @ 15% = 1,568

B] Differences between Income Tax and Value Added Tax

(1) Income tax is a direct tax based on profits or incomes. Where there is no profit, there is

no income tax.

Value Added Tax is levied on goods and services.

(2) Income tax is a yearly tax whereas value added tax is levied as soon as sales or services

are provided.

Payments are normally made on monthly basis.

(3) Income tax is progressive in the sense that the tax is levied on one’s ability to pay.

Value Added Tax is repressive. The rate is the same for all.

QUESTION 5

GH¢ GH¢

Net Profit per accounts 19,000

Deduct

Profit on shares 2000

Net dividend 500 250

16,500

Add Back

Theft of goods 600

Depreciation 860

Repairs 1720

Court fine 400

Donations 4000 7580

24080

Less Capital Allowance 750

23,330

DISTRIBUTION

BELLA BELINDA

Share of Profit 11,665 11665

Salary 12,000 -

Overseas Travel -___ 2000

Chargeable Income 23,665 13,665

THE INSTITUTE OF CHARTERED ACCOUNTANTS [GHANA]

BUSINESS AND CORPORATE LAW

NOVEMBER 2013 SOLUTIONS

QUESTION I

A] Sources of Law in Ghana

(i) The 1992 constitution

(ii) Acts of Parliament

(iii) Subsidiary legislation

(iv) Common law and rules of equity

(v) Customary law

B] Contractual Capacity of a Minor

Generally a minor lacks capacity to enter into contract however there are exceptions:

(a) Contract for the supply of necessaries bind him

Necessaries are those things that he needs for himself having regard to his status and life

(b) Contracts for education and training are also binding on him

(c) Contracts for landed property, purchase of shares though not binding on him if they are

not repudiated within reasonable time after attainment of majority are binding on him

QUESTION 2

REMEDIES AVAILABLE TO THE INJURED PARTY

i. Damages

ii. Specific performance

iii. Injunction

iv. Quantum meruit

v. Recission

QUESTION 3

A] Circumstances under which goods can be rejected

i. Where the seller is guilty of a breach of a fundamental obligation

ii. The seller is guilty of breach of a condition of the contract whether the breach is in

respect of all the goods or subject to sub-section (2) of part only

iii. The buyer has entered into the contract as a result of fraudulent or innocent

misrepresentation on the part of the seller

B] Circumstances under which goods are deemed to have been accepted.

i. When he intimates to the seller that he accepts them

ii. If the buyer does not, within a reasonable time after delivery of the goods, inform the

seller that he rejects them

iii. If the buyer wrongfully refuses or neglects to put the goods at the disposal of the seller

after notifying the seller that he rejects them

QUESTION 4

When the Registratrar of Companies may exercise his powers include:

(a) That any provisions of the code are not being complied with

(b) That any document which the company is required to send to him does not disclose a full

and fair statement of the matters which it purports to relate

(c) That the business of the company is being conducted with intent to defraud its creditors

or the creditors of any other person for a fraudulent or unlawful purpose

(d) That the business of the company is being conducted or the powers of the directors are

being exercised in a manner oppressive to some part of the members or debenture holders

are in disregard of their proper interests as members, shareholders, officers or debenture

holders

(e) That persons concerned with its formation or the management of its affairs have in

connection therewith been guilty of a breach of duty towards it or its members

(f) That members of the company have not been given all the information with respect to its

affairs that they might reasonably expect

QUESTION 5

Information to be provided when registering a company

(a) Name of the company

(b) Its authorized business or if the company is not formed for business the nature of its

objects

(c) The names and any former names, addresses and business occupations of its directors and

secretary and particulars of any other directorships hold by them

(d) The name and address of its auditor

(e) The addresses of its registered office and principal place of business and postal address

(f) The place where the register of its members are kept if not at the principal place of

business

(g) If the company has shares

- The amount of stated capital

- The number of its authorized shares or each class the amount paid thereon either in

cash or otherwise than in cash and the amount remaining payable either due for

payment or not yet due for payment

(h) The return shall further state that the declaration referred to in section 28 has been

delivered.

(i) The return shall be signed by two directors and the secretary

QUESTION 6

Procedures for the appointment and retirement of Directors

(a) At the first annual general meeting all the directors shall retire from office and at

subsequent annual general meeting one third of the number or the number nearest to one

third shall retire from office

(b) The directors to retire in every year shall be those who have been longest in office since

their last election but between persons who were appointed the same day unless they

agree among themselves it shall be determined by lot

(c) Any director appointed to the office of managing director shall not while holding that

office be subject to retirement by rotation or be taken into account in determining the

rotation of retirement of directors

(d) A retiring director shall be eligible for re-election

(e) The company at the annual general meeting at which a director retires may fill the

vacancy by electing a person to fill it. In default the director concerned shall if offering

himself for re-election, be deemed to have been re-elected unless at such meeting it is

expressly resolved not to fill the vacant office or unless a resolution for such a director’s

re-election has been put and lost

(f) The proposal to put up the name of a new director, other than the retiring director, shall

be left in writing at the registered office not less than three days but not more than

twenty-eight days by a member entitled to attend and to vote of his intention to propose

the person for election and also a notice in writing signed by the person of his

willingness to be elected

(g) On any increase or decrease in the number of directors may by ordinary resolution

determine in what rotation the increased or decreased number is to retire from office

QUESTION 7

The exceptions to the Partnership business

(a) A company registered under the companies code

(b) A company, body corporate or incorporated association formed under any other

enactment

(c) A body corporate formed in accordance with the law of any foreign country whether or

not carrying on business in Ghana

(d) A joint venture without a firm name for one or more specific operations

(e) Family ownership or co-ownership of property shall not create a partnership

notwithstanding the fact that the co-owners share any profits made by the use of the

property.

(f) The remuneration of a servant or agent of a person engaged in business by a share of the

profits of the business shall not by itself make the agent or servant a partner

QUESTION 8

A] Information to be provided in the Partnership Deed

(1) The name of the firm

(2) The general nature of business

(3) The address and postal number of the business

(4) The principal place of business of the partnership

(5) All other places in Ghana at which the business is carried out

(6) The names and any former names, residential addresses and business occupations

of the members of the partnership

(7) The date of commencement of the business

(8) Particulars of any change requiring registration under section 25 of the Act

B] The Registrar can refuse Registration of a Partnership where;

(1) the name is not registrable under the Act

(2) Any of the business is unlawful

(3) the name of the firm is misleading

(4) any of the partners is an infant or of unusual mind, or a person who within

the preceding five years has been found guilty of fraud, dishonesty, whether

convicted or not with trade or business or an undischarged bankrupt

(5) the statement is incomplete, illegible, inaccurate, irregular or on paper

insufferably durable to be suitable for registration

THE INSTITUTE OF CHARTERED ACCOUNTANTS – GHANA

NOVEMBER 2013

QUANTITAIVE TOOLS IN BUSINESS - SOLUTIONS

QUESTION 1

i. Guidelines for constructing a Linear programming (LP) model are:

a. Understand the problem

b. Collect data for all parameters of the model.

c. Identify the decision variables. For example, the number of Type A and Type B vehicles

to be employed for carrying cocoa to Takoradi

d. Choose a numerical measure of effectiveness for the objective function e.g. tonnage of

coal carried.

e. Represent this measure of effectiveness as a linear expression involving the decision

variables. For example, maximize Z = 2A + 3B.

f. Identify and represent all the constraints as linear expressions involving the decision

variables e.g. A + B ≤ 30

ii).

Feasible solutions are all those possible solutions which can be worked upon under given

constraints, the regions comprising all feasible solutions is referred as Feasible Region.

Optimum solution is the best of the feasible solution.

a) Objective Function

Max 5x + 6y + Z

Subject to

32x + 25y + 3Z ≤ 50

24x + 45y + 8Z ≤ 40

X1 Y1 Z ≥ 0

b) Objective function

Min (50 M1 + 40 M2)

Subject to

32 M1 + 24 M2 ≥ 5

25 M1 + 45 M2 ≥ 6

3 M1 + 8 M2 ≥ 1

M1 = Raw material 1, M2 = Raw material 2

c) Graphical solution of the dual

M1 = 0 6M2 =5

4

M2 = 5

24

(0, 5/24)

M2 = 0 8M1 =5

4

M1 = 5

32

(5/32,0)

M1 = 0 9M2 =6

5

M2 = 2

15

(0, 2/15)

M2 = 0 5M1 =6

5

M1 = 6

25

(6/25,0)

M1 = 0 8M2 =1 M1 = 1

8

(0, 1/8)

M2 = 0 3M1 =1 M1 = 1

3

(1/3,0)

Drawing to be scanned

3 M1 + 8 M2 =1-------- 1

8 M1 +6 M2 =5--------- 2

4

Eqn. 1 x 8

24 M1 + 64 M2 = 8-------3

Eqn. 2 x 3

24 M1 + 18 M2 = 15------4

4

Eqn. 3 – 4

46 M2 = 17

4

M2 = 17

184

Put M2 = 17 in Eqn. 3

184

24 M1 + 64 x 17 = 8

184

24 M1 = 8 – 64 x 17

184

24 M1 = 384

184

M = 384

4416

= 48

552

= 12

276

= 3

69

= 1

23

A (0, 5/24)

50 (0) + 40 (5/24) = 8.33

B {1/25, 17/184}

50 (1/25) + 40 (17/184) = 5.69

C (1/3, 0)

50 (1/3) + 40 (0) = 16.67

Therefore the optimum solution is given by M1 =1, M2 = 17 and Min (50 M1 + 40 M2) = 5.7

25 184

d) The shadow price of constraint due to availability of Raw material 1 is 1/25

The shadow price of constraint due to availability of Raw material 2 is 17/184.

QUESTION 2

A.

i. It is a continual distribution

ii. It is symmetrical bell shaped

iii. The mean, median and mode bisect the distribution

iv. The probability density of a normal random variable is

F(x) = 1 exp {- ½ (X – ) ²}, x < x < 0

ó√2π ó

B. Let x be the return on the investment. X N(10,25)

i. P(x < 0) = P {x – 10 < 0 - 10}

5 5

= P (Z < -2.00)

= 0.0228

ii. P(x < 0) = P{x – 10 < 0 - 10}

10 10

= P (Z < -1)

= 0.1587

iii. As you can see, increasing the standard deviation increases the probability of

losing money.

Z 0.05 = ROP-U

ó 0.05

1.645 = ROP - 200

50

ROP = 50 (1.645) + 200 Where ROP = reader point

= 282.25

The policy is to order a new batch of fans when there are 283 fans left in inventory.

QUESTION 3

A. A maximum turning point is a point on a curve where the slope of the curve changes sign

from positive to negative. E.g.

A maximum turning point

A minimum turning point is a point on a curve where the slope of the curve changes sign from

negative to positive. E.g.

A minimum turning point

B. Let x be the number of boxes ordered

Number of orders = 40,000

20x

Ordering Costs = 40,000 x 45

20x

Carrying Cost = 2x = x as average inventory will be x

2 2

Total cost (C) = 90,000 + x

x

For minimum cost dc should be zero

dx

dc = -1. 90,000 + 1

dx X²

0 = -90,000 + 1

X²

X² = 90,000

X = -300, or X = 3,000

For minima d²C should be positive

dx²

d²C =( -2) (-1)( 90,000) = 180,000

dx² X³ X³

At X = -300, d²C = 180,000 = -0.006 < 0

dx² -300³

Thus X= -300 gives the maximum cost

If X = 300, d²C = 180,000 = 0.006 > 0

dx² 300³

Thus X = 300 gives the minimum cost.

Hence the firm should order 300 boxes each containing 20 units.

QUESTION 4

i.

The equation can be written as 0.7 0.1 X = U

0.3 0.9 Y V

ii. Solving for x and y we have

X = 9/6 -1/6 U

Y -3/6 7/6 V

iii. If U = 6,000 and V = 3,000 then

X = 9/6 -1/6 6,000 = 8,500

Y -3/6 7/6 3,000 500

8,500 students lived on campus last semester

For the number of students who will live on campus next semester, we will have x = 6,000 and y

= 3,000 So using the initial formulation we have:

U = 0.7 0.1 6,000 = 4,500

V 0.3 0.9 3,000 4,500

Therefore 4,500 students will live on campus next semester.

QUESTION 5

A] Advantages of Periodic Review Inventory

1. Obsolete items are identified and eliminated.

2. Advantages of placing large orders

3. Large quality discounts may be obtained.

4. Production economies can be realized due to efficient production planning as a

result of the same sequence of ordering

Disadvantages of Periodic Review Inventory

1. Generally its associated with Larger Stocks holdings.

2. Re-order quantities are not at optimal levels.

3. Less responsive to changes in consumption.

4. It is difficult to set appropriate periods for review.

a) EOQ = 2Kd

H

Where K = GH¢20 P = 1 ; H = 20% d = 2,500

EOQ (2,500 and over)

EOQ (2,500 and above) = 2 x 20 x 25,000

at P = 1.0 0.2 x 1

= 2236 pairs of socks

Since this EOQ lies outside the range, it is not feasible.

EOQ (1750 – 2499) = 2 x 20 x 25.000

at P = 1.5 0.2. x 1.5

= 1,825 pairs of socks

Since the EOQ lies within the quantity range it is feasible

EOQ ( 1,000 – 1,749) = 2. x 20 x 25,000

at P = 2.0 0.2 x 2

= 1,581 pairs of socks

Since this EOQ lies within this quantity range it is feasible.

EOQ (1 – 999) = 2 x 20 x 25,000

at P = 2.5 0.2 x 2.5

= 1,414 pairs of socks.

Since this EOQ lies outside the quantity range it is not feasible.

(ii) Total Cost = (Purchase cost + Inventory cost)

= CD + DK + HQ

Q 2

Total Cost (P = 1.0.) = 25,000 x 1 + 25,000 x 20) + (0.2 x 2,236)

2,236 2

= 25,000 + 223.6 + 223.6

= 25,447.2

Total cost (P = 1.5) = 25,000 x 1.5 + 25,000 x 20 + 0.3 x 1,825

1,825 2

= 37,500 + 274 + 273.75 = 38,047.75

Total Cost (P=2) = 25,000 x 2.0 + 25,000 x 20 + 0.4 x 1581

1,581 2

= 50,000 + 316 + 316 = 50,632

Total Cost (P = 2.5) = 25, 000 x 2.5 + 25,000 x 20 + 0.5 x 1414

1,414 2

= 62,500 + 353.6 + 353.5

= 63,207.1

(iii) Optimal purchasing policy for the departmental store is the least total cost and feasible

range.

Which is = 1825 units

(iv) Length of Inventory Cycle = 365 x Q

D

= 365 x 1825 = 26.6 days

25,000

The inventory cycle has 1825 units to be purchased and this would span 26.6 days of stock.

QUESTION 6

A]

x f xf

0 32 0

1 28 28

2 18 36

3 4 12

4 3 12

∑f=85 ∑fx=88

(i) The mean

π = ∑fx = 88 = 1.04

∑f 85

Median = ½ x [½Nth observation + (½N)th - 1

Observation N = 85

½ x N = ½ x 85 = 42.5

32 + 28 = 60 > 42.5 implies the Median = ½ (1 + 1) = 1

The mode

0 is the most common observation

→ the mode = 0

(ii) 1st quarter

= (¼ x 85)th observation

= 21.25th observation

Now 32 > 21.25 implies the 1st quarter = 0

2nd quarter = the median = 1

3rd quarter = (¾ x 85th observation) = 63.75th observation

Now 32 + 28 + 18 > 63.75; Therefore the 3rd quarter = 2

Inter quarter = 2 – 0 = 2

The variance, standard deviation

x f fx fx2

0 32 0 0

1 28 28 28

2 18 36 72

3 4 12 36

4 3 12 48

∑f=85 ∑fx=88 ∑fx2=184

Variance = ∑fx2 – (∑fx)2

= 184 – 2

85

= 184 – 2 = 2.165 – (1.035)2 = 2.165 – 1.071

85

= 1.094

Standard deviation = = 1.05

B]

0< 1 < 1.04 that is

Mode < median < mean and so the distribution of the date is positively skewed.

QUESTION 7

(i) & (ii)

Day Customers Centered 3-Day Centered 3-Day Centered 5-Day Centered 5-Day

1 90

2 125 302 100.7

3 87 288 96 509 101.8

4 76 294 98 512 102.4

5 131 300 100 474 94.8

6 93 311 103.7 499 99.8

7 87 292 97.3 522 104.4

8 112 298 99.3 474 94.8

9 99 294 98 530 106

10 83 331 110.3 521 104.2

11 149 310 103.3 480 96

12 78 298 99.3 537 107.4

13 71 305 101.7 537 107.4

14 156 310 103.3

15 83

(ii)

X Y XY X2

3 101.8 305.4 9

4 102.4 409.6 16

5 94.8 474 25

6 99.8 598.8 36

7 104.4 730.8 49

8 94.8 758.4 64

9 106 954 81

10 104.2 1042 100

11 96 1056 121

12 107.4 1288.8 144

13 107.4 1396.2 169

£x = 88 £y = 1119 £ = 9014 Ex2 = 814 n = 11

b= nΣxy – ΣxΣy b = 11 x 9014 – 88x1119 b = 0.564

nΣx – (Σx)² 11 x 814 - 88²

a= Σy – bΣx ie a= y-bx where a= 1119 – 0.564 x 88 a = 97.22

n n 11 11

Therefore the trend line is y = 87.22 + 0.564x

(iv)

x Customers C Trend Y C/Yx100 Seasonal Forecast C - SF

1 90 97.78 92.04 80.74 9.26

2 125 98.35 127.10 129.48 4.48

3 87 98.91 87.96 84.84 2.16

4 76 99.48 87.96 82.14 6.14

5 131 102.04 128.38 134.34 3.34

6 93 100.61 92.44 86.30 6.7

7 87 101.17 86.0 83.54 3.46

8 112 101.73 102.30 133.93 21.93

9 99 102.30 96.77 87.95 11.25

10 83 102.86 80.68 84.93 1.93

11 149 103.42 144.07 136.15 12.85

12 78 103.99 75 89.20 11.20

13 71 104.55 67.91 86.32 15.32

14 156 105.12 148.40 138.39 17.61

15 83 105.68 78.54 90.65 7.65

Average Seasonal Variation

11 – 12 12 – 1 1 – 2

92. 04 127.10 87. 96

87.96 128.38 92.44

86.0 110.10 96.77

80.69 144.07 75.00

67.91 148.40 78.54

414.60 661.05 430.71

414.6 661.05 430.71

5 5 5

Average: 82.92 132.21 86.14 301.27

Adjusted: 82.92 x 300 = 82.57%

301.27

132.21 x 300 = 131.65%

301.27

86.14 x 300 = 85.78%

301.27

Seasonal Forecast = Trend Estimates X Seasonal Variation %

SF1 = 97.78 x 82.57% = 80.74

SF2 = 98.35 x 131.65% = 129.48

SF3= 98.91 x 85.78% = 84.84