Corporate Accounting Report: Analysis of Cabcharge Ltd Financials

This report provides a comprehensive analysis of Cabcharge Ltd's financial reporting practices, focusing on compliance with IFRS and IASB regulations for the years 2016 and 2017. It assesses the relevance and comparability of the company's financial statements, examining key ratios such as EBITDA and revenue disclosures. The report also evaluates the adequacy of environmental disclosures, noting a lack of quantitative data. Furthermore, it delves into pre-acquisition entries and consolidated statements, highlighting the importance of accurate accounting for dividends and goodwill. The analysis concludes with recommendations for improving environmental disclosures and overall financial reporting to enhance transparency and decision-making.

Running head: CORPORATE ACCOUNTING 1
Corporate Accounting:
Student’s Name:
University Affiliation:
Date:

CORPORATE ACCOUNTING 2
TABLE OF CONTENTS
PART ONE......................................................................................................................................3
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................3
Background......................................................................................................................................4
Report..............................................................................................................................................5
Relevance.....................................................................................................................................5
Comparability...............................................................................................................................6
Environmental Disclosures..............................................................................................................6
Recommendations............................................................................................................................7
Conclusion.......................................................................................................................................7
PART TWO.....................................................................................................................................8
References......................................................................................................................................11

CORPORATE ACCOUNTING 3
PART ONE
Executive Summary
The paper focuses to understand on the operations of Cabcharge Ltd and verify the level
of compliance on its reporting in compliance to laid down regulations by IFRS and IASB which
determines the quality of annual financial reports published by the organization for the year
ended 2016 and 2017 with a close attention to current control process.
Introduction
Financial reports are great importance when it comes to the organization and the
consumers of the same information because it should possess the most qualitative traits of
financial reports. Failure to which most of the decision made will be uninformed and may be
misleading to both the shareholders and the organization as well. Therefore, it bits logic when
the firm's financial reports are in manner that they can generate information that is up to date and
can be relied upon by any party that wants to make a decision based on them (Abdallah 10)
Accountants, board members, and the top management should exercise due diligence and
exercise high degree of competence while preparing the financial statements to make sure the
information presented is accurate and free of any material misstatements and errors. In fact the
verification and examination of the accounts on whether they portray a true and a fair view is an
undertaking that auditors conduct to provide assurance that the reports were prepared in
accordance to the IFRS and comply to the GAAP (Andrews 1516) Compliance mean that every
accounting entry made is in agreement with the expectation of the public and the bodies

CORPORATE ACCOUNTING 4
governing the financial report of public organization listed in Australian Stock or Securities
Exchange.
The essence of the assignment is to examine whether the annual reports for the selected
companies comply with what is expected and propose recommendation on how the reporting can
be done better. It is difficult to determine the quality of an annual report, however, the ability to
understand, compare and draw a conclusion from a given report determines the quality of the
report under question (Brigham et al. 45). There are three factors that determine the quality of a
report: understandable, timeliness, comparability and verifiable against set criteria. However, the
quality of a good report is determined by IASB. That is International Accounting Standards
Body.
Background
The report will focus on how Cabcharge Ltd has maintained its annual reports and
disclosures made in regard to the information that is deemed to be high value to the users of the
financial statements. The company deals with how payments can be made simpler through online
platforms and that makes it outstanding. The firm has developed various mechanisms through
which it can link booking with internet thus enabling payments (Brown et al. 31). Despite the
regulatory hindrances in different markets, Cabcharge has managed to venture into new markets
with an objective of getting customers' wants the certainty of service in peak periods thus
responding to the rising demand. The company declared that it had an intent of expanding to hire
segment areas in FY2017. The analysis of the report focuses on the financial year 2016 and
2017.

CORPORATE ACCOUNTING 5
Report
Relevance
It is a qualitative trait that relates to the annual reports and financial statement generated
by the organizations. Relevance means that information published for users consumption must be
of importance to the user of the statements (Chen et al. 2). Additionally, the information must
speak to the organization in material terms. Any information in the statements should make sense
to the final and immediate users of the financial statements to enhance decision making and
ensure that all related parties make their decision as informed by the financial statements
(Cheung & Lau 162) Irrelevance of the financial statements make the decision made by the
organization and other shareholders to make poor and uninformed decision that may make them
lose their investments in the organization. The relevance of the information is important even in
attracting other potential investors who may be willing to invest in the firm. The decision can
only be feasible only if the management has ensured that their information is communicating and
making sense to the parties concerned. Failure to which the information will be rendered
misleading and inaccurate for making informed decisions (Christensen 31). From the information
provided Cabcharge has reported information which to a great degree is relevant for the users'
consumption and whose omission could have led to poor decisions. For example, the company
did the report on key ratios of financial statements such EBITDA for the year 2016 and 2017.
The omission of such statements means that the organization would fail to institute mechanisms
upon which the Earnings before Interest Tax and Depreciation would not have come to the
shareholder's attention (Dymski 3). The disclosure of total revenue of 2016 and 2017 is enough
to assert that much of information generated by the Cabcharge Company is relevant to the
decision making of the firm as well as the shareholders and other stakeholders.

CORPORATE ACCOUNTING 6
Comparability
This refers to the ability to compare financial statements for the different reporting
financial years. The comparability aspect helps the organization monitor whether the firm is
operating well or it is operating on a declining trajectory. Noting differences between the firm's
financial years will help the company develop strategies' on ways to reduce costs and boost their
revenue (Guay et l. 13). The case is possible when the firm reports the financials for current year
against the result for previous years. This will help shareholders establish trends in company
performance and thus boosting their confidence when the company profits are increasing from
one year to the other. The most interesting thing to note is that Cabcharge has been reporting its
financials in a manner that it is comparable from one year to another. For example in the year
2016, the company statements of financials were reported against the 2015 financial results the
same case applied to the year 2017 financials which were against the 2016 financials (Johnston
& Petacchi 34). Through this one can tell the directions of the organizations over time. For
example, in 2016 the company reported a revenue of 151.9 M Dollar while in 2016 it did report
168.8 M Dollar which is a decline in total revenues by 10.0%. The information is conclusive in
nature and it may be an alarm to the management to devise mechanism upon which they can
make strategies that will boost the firm's revenue.
Environmental Disclosures
The environmental disclosures for any organization can either be in qualitative or
quantitative forms. With the dynamics in the reporting structure of the firms. There has been a
rise in the need to report both quantitative and qualitative reports on how the firm is planning to
maintain the environment green with an aim of making the environment green (Libby 42).
Cabcharge report is narrative in nature and they dictate that they are working in an effort to

CORPORATE ACCOUNTING 7
ensure that they minimize or eliminate wastes products. The firm is not based in the
manufacturing industry and thus no much carbon is produced by it. For example, the company
follows the principle of reusing and recycling as it seeks to actively improve the systems and
processes to minimize operation inefficiencies (Mohanty & Das 45).
Question 2
The information presented on environmental disclosures is not adequate since it lacks a
quantitative bit of the information and the process of financing the strategies the firm want to
implement in order to improve environmental conservation has not been stated. The disclosures
as they are may be misleading to the shareholders.
Question 3
Recommendations
The company should improve it environmental disclosures by giving the financial
disclosures on how much do they intend to spend on the environment and how are they planning
to implement such strategies. The company to quote the accounting and reporting standards used
in their annual reports to verify their compliance levels. The Auditors assurance should also be
included in the annual report to enhance performance and ensure that everything runs as required
by the policies and procedures.
Conclusion
Reporting in corporate accounting is a key issue that organizations need to focus and
ensure more of quantitative reports are generated in comparison to qualitative reports. That is,
both should support each other in order to generate conclusive and informed reports on various

CORPORATE ACCOUNTING 8
reporting issues regarding an organization. Otherwise, the reports will be inconclusive,
incomplete and lack merits leading to poor decision making.

CORPORATE ACCOUNTING 9
PART TWO
Pre-acquisition entries are key since they help the company know its financial position
before it acquires the target organization and on the same note. The acquirer is in a position to
gauge the extent by which the acquired company will affect the price, earning and dividends per
share. After the acquisition, most shares tend to be diluted due to increasing controlling interest.
The consolidated statements are key since they give a true picture of the company once the
acquisition process is complete and the deal closed (Omoye and Annie for 10) However, caution
must be taken while carrying out the pre-acquisition entries to avoid confusion. Prevents double
counting of assets, equity and recognize any gain from the purchase
Yes since the acquirer company has a right to a dividend already declared and thus is
entitled to dividend from the acquired company (Schaltegger and Burritt 12). The effect will be
that the acquirer is purchasing the dividend to be received in cash value. In considering the
amount transferred should in two separate form in terms of immediate dividend received and
consideration for the shares acquired by the acquirer. Most companies that engage in acquisition
processes tend to be shareholders to the subsidiaries and thus they are in a better position to
understand the operations of the organization better than any other entity (Scott 18).
Distinguishing pre and post-acquisition dividends is of not much importance because all
dividends received before and after acquisition are recorded as income in profit and loss account
since they are part investments made in the subsidiary company. Additionally, differentiating the
two sets of dividend help the firm in noting the differences in terms of the ability of the acquirer
to exercise management to the subsidiary in order to generate high profits. This will enhance
comparability between the firm before acquisition and after acquisition (Suryanto 19). Therefore,

CORPORATE ACCOUNTING 10
therefore, it is prudent for the firm to have these two dividends recorded differently in order to
promote the process of management and making sure the operations within the organization are
affected as effectively as possible (Tepalagul & Lin 101).
In times when the subsidiary has recorded a goodwill, it is necessary for the acquirer to
deduct the goodwill in its pre-acquisition entries to enhance the accuracies and the prudent
concept of the accounting theory (Wahlen 3). Additionally, this will ensure that a true reflection
of the firm's operation has been reflected in the underlying consolidated accounts. Any goodwill
in the books of the subsidiary does not qualify as an identifiable asset
The adjustment is required to show the net realizable value of the subsidiary and in the
effect, it is deducted to in the consolidated statements after the acquisition. In the acquisition
analysis, the consideration transferred is compared to the identifiable net assets of the subsidiary
that are acquired. The net realizable value is added to the final accounts to record the value to
which the acquirer has derived in acquiring the company's assets (Warren & Jones). The
adjustments are required to give a true picture of the firm's operations and the extent to which the
parent company can exercise the controlling interest. The consolidation of accounts requires both
pre and post-acquisition entries in order to understand how the company has operated ever since
it was acquired and since its management has changed hands and oversight is provided by a
completely different economic entity (Weygandt et al. 2).
Consolidation of accounts has to be dynamic in accounting world today and people keep
on coming up with new ways of consolidating their accounts without focusing on standards set
by the IASB and IFRS. The happening have been as a result of lack of proper oversight between
the managing people and the managed and thus the process through which accounting books are
closed and consolidation reports generated do not about to anything substantial other than

CORPORATE ACCOUNTING 11
shambles accounting. Most companies are not adhering to GAAP and thus there reporting tend to
be skewed towards one end and may even lack a touch when it comes to the process of decision
making. It is a call to every firm to foster accrual or cash accounting whichever works for the
best.

CORPORATE ACCOUNTING 12
References
Abdallah, A.A.J., 2014. The impact of using accounting information systems on the quality of
financial statements submitted to the income and sales tax department In
Jordan. European Scientific Journal, ESJ, 9(10).
Andrews, R., 2015. Vertical consolidation and financial sustainability: evidence from English
local government. Environment and Planning C: Government and Policy, 33(6),
pp.1518-1545.
Brigham, E.F., Ehrhardt, M.C., Nason, R.R., and Gessaroli, J., 2016. Financial Managment:
Theory And Practice, Canadian Edition. Nelson Education.
Brown, L.D., Call, A.C., Clement, M.B. and Sharp, N.Y., 2015. Inside the “black box” of sell‐
side financial analysts. Journal of Accounting Research, 53(1), pp.1-47.
Chen, C.W., Collins, D.W., Kravet, T.D. and Mergenthaler, R.D., 2018. Financial statement
comparability and the efficiency of acquisition decisions. Contemporary Accounting
Research, 35(1), pp.164-202.
Cheung, E. and Lau, J., 2016. Readability of Notes to the Financial Statements and the Adoption
of IFRS. Australian Accounting Review, 26(2), pp.162-176.
Christensen, H.B., Lee, E., Walker, M. and Zeng, C., 2015. Incentives or standards: What
determines accounting quality changes around IFRS adoption?. European Accounting
Review, 24(1), pp.31-61.