Wired Telecom Limited (WTL) is a telecom service provider that deals in offering call services, mobile money, airtime, phones and related accessories. Your firm, PMG & Co. is the auditor of WTL for the year ended 30 June, 2018.

The telecommunication sector is growing rapidly and more services are on demand by customers. Previously, it was just calls and airtime but now banking services are the next service on demand. Client bank accounts are now linked to telecom numbers. Clients are able to transact with banks using their phones and vice versa. WTL has been forced to expand rapidly to match the competitors.

The sector is also highly regulated by Uganda Communications Commission (UCC). It is now in the spotlight like never before. WTL has to file reports with the regulator on a monthly basis, and as and when required.

There are new taxes to be collected by WTL on behalf of government. They are in the budget for the financial year 2018/2019. Uganda Revenue Authority requires that these taxes are remitted on time and without fail.

The International Accounting Standard Board (IASB) has issued new accounting standards. IFRS 15: Revenue from contracts with customers and IFRS 16: Leases are just some of the new standards. These are key standards to WTL operations.

WTL borrowed Shs 50 billion from off-shore banks and local banks to meet the increasing demand for both physical and software infrastructure developments throughout the country.

There are press reports that telecom companies have been under declaring their revenue to the Uganda Revenue Authority hence paying less tax as required by the Income Tax Act. WTL attributes this to weak software controls and an effort will be made to upgrade the controls.

WTL's inventory includes airtime cards, phone handsets, and data/internet equipment. Airtime cards are now becoming obsolete as customers now prefer to buy airtime online using mobile money. WTL has large amounts of inventory in form of airtime cards.PMG & Co. will be required to attend the inventory count scheduled for the week starting 1 July, 2018.

SECTION B

Attempt three of the four questions in this section

Question 2

Required:

1. (a)Explain the business risks facing WTL. (6 marks)
2. (b)Suggest the interventions that can be undertaken to mitigate the risks in
3. (a) above.
4. (6 marks)
5. (c)Advise WTL on the effective software controls that can be put in place.
6. (8 marks)
7. (d)Describe the procedures PMG & Co. should carry out before the inventory count at WTL.

BTS & Co., where you work as an audit senior is the auditor for Traders Saving Association Limited (TSAL) for the year ended 30 June 2018. TSAL is a registered Savings and Cooperative Society (SACCO) with over 1,000 members. BTS & Co. has been auditing TSAL for the last 3 years. They gave a "Qualified opinion except for" for the first two years. In 2017, they gave an "Unqualified audit opinion". The members have expressed concern about the change of audit opinion and desire to know why this is the case.

TSAL members have also expressed their concern why the auditors have never communicated to them throughout their three years of audit of TSAL. ISA 260, however, requires that the auditor determines the appropriate persons within the organisation governance structure with whom to report relevant audit matters concerning the organisation. BTS & Co. is, therefore, under no obligation to communicate with all the members of TSAL. However being a socially responsive audit which serves public interest, BTS & Co is considering a response to concerns raised by TSAL members.

Required:

Prepare briefing notes to TSAL members:

1. (a)explaining the circumstances under which BTS & Co. may issue:
2. (i)Unqualified audit opinion.
3. (ii)Qualified opinion-except for.
4. (b)explaining the objectives the auditor seeks to achieve in determining the
5. appropriate persons within TSAL to communicate to during an audit.
6. (8 marks) (Total 20 marks)

Question 3

In 2017, Uganda Revenue Authority (URA) in partnership with Uganda Registration Services Bureau (URSB) and Kampala Capital City Authority (KCCA) commenced a joint field operation within Kampala under the Taxpayer Register Expansion Project (TREP). This operation was in response to the Uganda Bureau of Statistics (UBS) report which indicated that Uganda's informal sector contributes at least 50 per cent of the country's Gross Domestic Product (GDP) but pays less than 20% in taxes.

This prompted URA to organize a tax clinic for Kikuubo tradersto sensitize them about the benefits of formal business registration, their rights and obligations with regard to payment of income taxes and trading licenses. The exercise was seen as a move to improve value and ethics in business while reducing on the unethical business practices amongst traders in Uganda. While addressing traders, one of the representatives from URA, CPA John Musisi said ".....tax compliance helps government raise revenue to meet huge public expenditure for infrastructure and public services thus creating a favourable business environment."

The proprietorof Mapeera Enterprises has approached you to enlighten him on several business ethical issues talked about at the tax clinic.

Required:

(a) Prepare briefing notes:

1. (i)explainingto the proprietor of Mapeera Enterprisesthe meaning of the phrase "Value and Ethics in Business''.
2. (2 marks)
3. (ii)describing the unethical business practices exhibited by traders in

Uganda. (4 marks)

(b) (i)

Explainto Kikuubo traders the benefits of adhering to business

ethics. (6 marks) (ii) Discuss the different myths about business ethics that Kikuubo

traders would encounter when trying to adhere.

victimised.

(ii) steps to be taken to seek redress, if victimised.

(4 marks)

(2 marks)

(b) Explainto Teddy the:

(i) details sheshould include in the disclosure of the impropriety.

(ii) consequences of making false disclosures.

Question 4

Ms. Teddy Nunda is a new employee in the Finance & Accounts department of VMC Electronics Limited, a company that deals in the sale of TVs and radios. Teddy is an Accounts Assistant on probation. For the last three weeks, she has had work related stress suspecting her immediate supervisor to be stealing funds from the company. This suspicion arose after getting a variance between the cashbook balance and the bank balance for last three consecutive months whenever she prepared a bank reconciliation statement. The supervisor is on a sick leave.

She wants to disclose the impropriety but fears to be victimised and still the directors may fail to take action. She also fears making false disclosures.Besides, her confirmation on the job depends on the supervisor's recommendations. She has discussed the matter with her former lecturer of Business Ethics and advised her that this amounts to void employment contracts as per the Whistleblowers Protection Act 2010.

Required:

Using the provisions of the Whistleblowers Protection Act 2010:

(a) Describethe:

(i) circumstances under which an employee is considered to be

(iii) consequences of failure to take action on the impropriety disclosed.

(2 marks)

(c) Identify the indicators of void employment contracts at workplace like VMC Electronics Limited.

Question 5

The King Report on Corporate Governance is a ground-breaking guide for the governance structures and operation of companies in the world today. It was issued by the King Committee on Corporate Governance. Four reports were issued in 1994 (King I), 2002 (King II), 2009 (King III) and 2016/2017 (King IV).

The King Report has been cited as "the most effective summary of the best international practices in corporate governance". Arguments have been forwarded that in the wake of financial crisis; it is now common practice to separate the roles of Chairman of the Board and CEO.

Required:

(a) With reference to King III report on corporate governance, discuss the principles of:

1. (i)Ethical leadership and corporate citizenship.
2. (ii)Accountability.
3. (iii)Governing stakeholder relationships.
4. (iv)Integrated reporting and disclosure.

(b) Discuss the validity of the view that calls to separate the Chairman of the Board and CEO roles in corporations.

SECTION C

Attempt one of the two questions in this section

Question 6

Being an entrepreneur comes with many challenges and the biggest one is how to make the business grow. Businesses can either grow organically or externally. As the firm grows, it will be required to withhold taxes to the government and one of the requirements for determining tax liability is the need for financial statements.

Required:

1. (a)Explain the different ways through which a business can grow.
2. (b)Describe the different users of accounting information.

(5 marks)

Required:

(a) (i)

Define the term "intellectual property".

JKL Sports sells customized T-shirts, caps and shoes. The owner of the company could not believe what he was seeing on his computer when he discovered, a website that was a duplicate of his site DesignAshirt.com. This confirmed that his intellectual property, such as graphics and images, had been stolen. Despite all this, the business was growing steadily and this created a large appetite for cash. With financial resources stretched, the firm is more vulnerable to unexpected expenses and uncertainties. JKL Sports has been advised to manage the financial resources effectively to minimize the challenges of business growth.

(ii) Explain the forms of protection a business like JKL Sports can use to protect its intellectual property.

(4 marks)

(b) Explain how an entrepreneur can manage the financial resources as the business grows.