CPA SECTION 6 – ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT (KASNEB PAST PAPERS WITH SOLUTIONS)

 

CPA

 

ADVANCED PUBLIC FINANCE AND

TAXATION

 

PART III

CPA SECTION 6

 

REVISION KIT

 

 

PAST EXAMINATION PAST PAPERS WITH SUGGESTED ANSWERS

 

 

 

Updated with November 2019 Examination Past paper

 

INTRODUCTION

 

Following our continued effort to provide quality study and revision materials at an affordable price for the private students who study on their own, full time and part time students, we partnered with other team of professionals to make this possible.

This Revision kit (Questions and Answers) contains kasneb past examination past papers and their suggested answers as provided a team of lecturers who are experts in their area of training. The book is intended to help the learner do enough practice on how to handle exam questions and this makes it easy to pass kasneb exams.

 

KASNEB SYLLABUS

16.1 External resource financing

  • Establishment of External Resource Department in the National Treasury
  • Role played External Resource Department in raising of external finances
  • Book keeping and management of donor funds
  • Regulation of grants administration
  • Monitoring of public projects through clients connections and EPROMIS
  • Development partners and contractual agreements

16.2 Public Investments

  • Establishment of government investment departments
  • Mandate of government investment departments
  • Establishment of State Corporations (State Corporation Act Cap 446)
  • Role of Public Investments Board; KenInvest
  • Other players in public investment

16.3 Public Private Partnerships arrangements

  • PPP models
  • PPP parties, (PPP committee, PPP unit, contracting authority, PPP nodes, transactional advisor)
  • Contract/project agreements, guidelines and standards
  • Composition and role of PPP petition committee
  • Establishment and role of PPP project facilitation fund
  • PPP projects in the country- case study

16.4 Public debt management

  • Establishment of debt management office
  • Objectives of debt management in public sector
  • Sources of public debt in Kenya
  • Debt management strategy paper
  • Relationship between debt management and budget process
  • Debt sustainability analysis
  • Comparative study of debt management strategy in East Africa Community
  • Management of debts county governments and other public entities
  • Role of Cabinet Secretary of the National Treasury in public debt management

16.5 Advanced aspects of the taxation of business income

  • Conversion of partnerships into liability companies, and incorporation of incoming and retiring partners during the year
  • Limited companies, including holding companies, taxation of related parties
  • Charitable institutions
  • Leasing entities
  • Co-operative societies
  • Trade associations and clubs

Taxation of extractive industries

  • Banking, insurance, sea and air transport undertakings
  • Unit trusts
  • Real estate investment trusts (REITS)
  • Property developers and contractors
  • Application of relevant case law

16.6 Tax administration and investigations and enforcement department

  • Tax fraud
  • Events which may trigger an investigation
  • Tax investigation
  • Back duty and in-depth examinations
  • VAT computation, imported services, VAT withholding agents, restriction on input tax claim submission of VAT documents, VAT documentation refunds, false claims and accountant’s certificate
  • Compensating tax
  • Incorrect and fraudulent returns
  • Customs and excise investigations
  • Negotiation for settlement
  • Tax audit
  • Appellant bodies and appeal procedures
  • Alternative dispute resolution mechanism
  • Application of relevant case law

16.7 Taxation of cross border activities

  • Distinction between trading in and trading with a country; double taxation agreements; theory, design and application
  • Regional perspective with reference to the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA)
  • Most favoured nation status
  • Generalised system of preference and AGOA
  • Withholding tax provisions
  • Tax havens and treaty shopping
  • Tax information exchange agreements OECD
  • Transfer pricing
  • Application of relevant case law

16.8 Tax planning

  • Tax planning for individuals
  • Identifying opportunities to alleviate, mitigate or defer the impact of direct or indirect taxation
  • Evaluating remuneration packages
  • Tax avoidance and anti-avoidance provisions
  • Uses of tax incentives
  • Disposal of business operations and restructuring of activities
  • SEZA
  • Tax risks

16.9 Tax systems and policies

  • Types of tax systems
  • Role of taxation in economic development
  • Design of a tax policy
  • Criteria for evaluation of a tax system
  • Tax reforms and modernisation of tax systems under various Acts
  • KRA structure – LTO, MTO

16.10 Professional practice in taxation

  • Forms of tax practice and matters relating thereto
  • Matters relating to new clients
  • Handling of client work
  • Disclosures in tax returns, computations and correspondence with the Revenue Authority
  • Moral and ethical issues in taxation
  • Tax agents, appointment, obligations, professional liability
  • Cancellation of tax agents licence
  • Role of tax agents in appeals procedure
  • Tax health check

16.11 Current developments in public finance and taxation

  • Legislative/Policy changes in public financial management
  • Large and medium taxpayers units
  • Tax information exchange arrangements
  • Capital gains tax, other taxes

16.12 Emerging issues and trends

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

CPA PART Ill SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

WEDNESDAY: 27 November 2019.                                         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.

 

 

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

THURSDAY: 23 May 2019.                                                    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.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

THURSDAY: 29 November 2018.                                             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.

 

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

THURSDAY: 24 May 2018.                                                      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.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

THURSDAY: 30 November 2017.                                               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.

RATES OF TAX (Including wife’s employment, self-employment and professional income rates of tax).

 

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

KASNEB

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

THURSDAY: 25 May 2017.                                               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.

 

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

KASNEB

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

THURSDAY: 24 November 2016.                                           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.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

KASNEB

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

THURSDAY: 26 May 2016.                                                    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.

 

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

KASNEB

CPA PART HI SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

THURSDAY: 26 November 2015.                                              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.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

KASNEB

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

PILOT PAPER

 

September 2015.                                                                           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.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

KASNEB

CPA PART III SECTION 6

ADVANCED PUBLIC FINANCE AND TAXATION

 

May 2015.                                                                           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.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTIONS

 

NOVEMBER 2019

QUESTION ONE

(a) Reasons for the increased use of information exchange programmes in relation to taxation

  • It has helped in reducing money laundering
  • It has also been used as a platform for the government to exchange information relating to economic integration.
  • Has helped in reducing tax evasion and corruption.
  • It adds in transferring of technology and labour mobility
  • Fast, efficient and inexpensive medium for the exchange of information

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTIONS

 

MAY 2019

 

QUESTION ONE

a) Reasons contributing to failures of taxation policies

  1. Political interferences on the implementation of the taxation policies. In most developing countries they are faced with political ill will political leaders and this affects implantation of tax policies.
  2. Lack of technical expertise – implementation requires personnel with knowhow on how to lay down the laid down policies.
  3. Lack of proper supervision, monitoring and evaluation of these tax policies and hence leading to non accomplished of the intended objective.
  4. High rate of tax evasion due to poverty and unemployment
  5. This is a key reason which tax policies in most developing countries have failed
  6. Impact of globalization on developing country revenue systems- globalization has changed the nature of economic activity and it has increased challenges faced revenue authorities

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTIONS

 

NOVEMBER 2018

 

QUESTION ONE

  1. Objectives of e-proMIS
  • Coordination – it serves as a decision support tool for the government to coordinate development effort in the country
  • Alignment– it helps the government to align all the projects with the national and interaction strategies and priorities
  • Harmonization – it helps in identifying development flow pattern, gaps, duplication of efforts, priority areas therepromoting harmony, transpired and effective delivery of projects
  • Performance measure – this allows organization project performance based on the comparison of target and actual values, financial, fiscal and time indicators.
  • Mutual accountability and empowerment – it promotes mutual accountability providing a complete, reliable and transparent picture of the development of the project
  • Managing the project resources – it is used to maintain project asset register.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTIONS

 

MAY 2018

 

QUESTION ONE

a) Strategies county government to manage long debts

  1. Enhancing revenue allocation: This will facilitate availability of funds to pay off existing debt
  2. Verification of all pending bill: Some counties have established pending bills committee to verify authenticate all outstanding payment. Debts which are not authenticated should be cancelled
  3. Debt rescheduling: This involves instituting measures to reschedule loan over a longer period of payment. It may also involve negotiating the interst rates downwards.
  4. Establishing risk management framework – this will help in analyzing the debt at the county level.
  5. Enhancement of open process for formulating and reporting of debt management policies

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTIONS

 

NOVEMBER 2017

 

 

QUESTION ONE

A) MORAL AND ETHICAL ISSUES AGAINST TAX AVOIDANCE

  • Paying a fair share: The issue is whether the profit are calculated correctly, it is possible that a company that has high sales but pays no tax may be making no profit. In some countries a number of multinational corporation are paying tithe or no taxes yet they are profitable
  • Taxation as a social responsibility: At a time when government appending cuts are having a real impact on the everyday lives of people all tax payers including multinationals could be avoiding to pay their fair share of taxes , avoiding tax is avoiding social obligation.
  • Need for certainty: With tax avoidance through manipulation of loopholes on legislation, the government is not certain of how much revenue can be allocated. This defies the cardinal principle in business ethics,
  • Transparency as a cardinal principle in business ethics: The aspect of transparency and full disclosure are usually lost under tax avoidance schemes.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTIONS

 

MAY 2017

 

 

QUESTION ONE

a) i) Explain public debt management

This is the process of establishing and executing a strategy for managing the government debt risk and cost objective and to meet any other sovereign debt management goal in order to raise the required amount of funding.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTIONS

 

NOVEMBER 2016

 

 

QUESTION ONE

a) Factors considered for countries to be taxed haven

  • Tax exemption – tax haven do not impose taxes on incomes generated in those countries
  • Deregulation – in majority of offshore jurisdiction, companies do not have to present annual account. They are subjected to legislative or regulative framework of the countries they are in.
  • Secrecy / opacity – in most off shore jurisdiction there is a culture of secrecy and confidentiality and not just in terms of financial information but also in terms of identify of the actual shareholders examples of countries considered to be tax havens: Bermuda, Virgin Island, Cayman Island, Bahamas, Isle of man, Switzerland, Jersey

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTION

 

MAY 2016

 

 

QUESTION ONE

a) Roles of debt management (DMO)

  • To minimize the cost of debt and borrowing over the long term taking into account all the risks
  • Promote the development of the financial market institutions for the government debt securities such as bond and bills
  • Ensuring the sharing of the benefit and cost of the public debt between the current and future generations
  • Helping the government reduce their exposures to interest rate, currency and other risks
  • Ensuring the sharing of the benefit and cost of the public debt between the current and future generations
  • Helping the government reduce their exposures to interest rate, currency and other risks

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

 

SUGGESTED ANSWERS AND SOLUTIONS

 

NOVEMBER 2015

 

 

QUESTION ONE

a) i) Reasons for growth of PPP use

  1. Inadequate resources the government to implement capital projects
  2. The need to transfer the risk of undertaking capital project to the private parties. To use expertise in the private sector for the implementation of such projects
  3. To reduce bureaucracy on the implementation of projects and increase efficiency levels
  4. To ensure service delivery to the residents of the country
  5. Top create investment opportunities to the private sector therehelping them create employment opportunity and the growth of economy.

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

SUGGESTED ANSWERS AND SOLUTIONS

 

SEPTEMBER 2015

 

 

QUESTION ONE

a) Stages of budget preparation

The budget process for the national government in any financial year shall incorporate the following stages:

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK

SUGGESTED ANSWERS AND SOLUTIONS

ADVANCED TAXATION

MAY 2015

 

QUESTION ONE

  1. a) i) How firms might employ Bankruptcy or liquidation of a firm to avoid tax:

 

When a company is facing financial problems it may avoid tax filing for bankruptcy or liquidation

If this is granted, the available asset will be used to set off pay off liabilities until they are settled fully.

 

ADVANCED PUBLIC FINANCE AND TAXATION REVISION KIT SAMPLE WORK



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