Case Assignment, Quality Equipment Hire Ltd. (QEH)
Accounting system will have to be more detailed to incorporate even minor fuel and electricity expenses that were previously treated as miscellaneous expenses. This means that a different accounting department need to be introduced that will account for all aspects involving carbon tax.
2. In future, what other information may be useful to calculate the QEH’s GHG Footprint?
Information on company waste disposal outside the company perimeters, employee business travel in vehicles, aircraft not owned by the organization, employee fuel use while commuting to from work, information on disposed products of the company, data on extraction, production and transport of purchased equipment of the company like new vehicles and equipment and information on transportation of products, materials and waste, (U.S. Environmental Protection Agency. 2003). Data on lost electricity during delivery which is the difference between consumed electricity and electricity supplied.
ACTIVITY 5. Identify what information should be reported to investment analysts to enable them to accurately reflect the financial impact of the carbon pricing mechanism in their valuation of …show more content…
This will help the government in their efforts of addressing the risks of greenhouse emissions.
Proper accounting will enable the management to understand the implications of energy use on the company, hence they will be able adopt energy saving technology and use of more friendly energy that will reduce financial burden for the company.
And finally, accounting if properly done will enhance investor and public confidence in the company for they will be able to accurately account for the reduced profit and this will enhance the performance of company shares in the market.
The company will definitely be affected by carbon pricing which may increase taxation expenses and reduce company profit. Reduced profit will in turn affect the share price of the company. However, proper accounting and reporting will install confidence in the company.
Business areas that exhibit high carbon pricing may need to be reconsidered especially if they are not viable investments for the company. The use of fuel by company customers’ accounts for most greenhouse emissions and a clear analysis should be done in this line of business. However, carbon taxation is necessary for the country and the public for it will help reduce greenhouse emissions thus forcing most organizations to use more efficient technologies and forms of energy that are friendly to the