Corporate accounting is a process which measures all the items and process related to the financial statement of an organization. In this report, The Citadel group limited has been evaluated on the basis of the recorded figures in the financial statement of the company and the annual report. The report focuses on the annual report (2017) of the company to measure and evaluate the cash flow analysis, compare the cash flow analysis from last year, income statement analysis and taxation recording system etc of the company. The report focuses on the AASB and IFRS rules to identify the recording system and the disclosure policies of the company.
In this report, the Citadel group limited has been taken into the concern to measure and understand various financial factors of an organization. The main operations of the company are to develop and deliver the various solutions about the management to the government of the country. The speciality of the company is to manage the complex functions and offer the services to government to resolve the issues. Company is operating its business in Australia. Headquarter of the company is in Symonston, Australia.
Cash flow statement of the Citadel group limited has been identified in the annual report of the company and it has been measured that how is the cash position of the company. The cash flow statement is one of the crucial statements of an organization which evaluates the cash outflow and cash inflow of an organization through classifying the cash flows into three main categories which are operating cash flow position, investing cash flow position and financing cash flow position (Landoni and Zeldes, 2017).
Annual report (2017) of the company explains that the cash flow statement of the company has been prepared according to AASB rules. The cash flow from the non cash items of the company has been higher from 2016 due to revenue changes in the company. Further, the PPE investment has been lowered by the company and the acquisition investment has been higher. In addition, the debt repayment of the company has also been lower (Annual report, 2017). However, it still leads to the company towards higher cash outflow.
Moreover, the dividend paid amount has been higher due to higher dividend payout ratio of the company and it leads to the higher financial activities cash outflow to the company. In addition, it has been recognized that the net changes in the cash flow are negative in the year of 2017.
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THE CITADEL GROUP LTD (CGL) Statement of CASH FLOW |
||
|
Fiscal year ends in June. AUD. |
2017-06 |
2016-06 |
|
Other non-cash items |
2,49,34,000 |
1,03,78,000 |
|
Investments in property, plant, and equipment |
-18,91,000 |
-29,18,000 |
|
Acquisitions, net |
-2,31,96,000 |
-14,95,000 |
|
Net cash used for investing activities |
-2,50,87,000 |
-27,75,000 |
|
Debt repayment |
-21,07,000 |
-53,93,000 |
|
Dividend paid |
-76,91,000 |
-49,49,000 |
|
Net change in cash |
2,46,000 |
-18,54,000 |
(Morningstar, 2018)
The cash flow statement items have been compared form the last 2 years item to evaluate that how well the current performance of the company is and what changes have been done in the payment and receivable policies of the company. The cash flow from operating activities of the company explains about the increment in the cash flow of the company (Ladas, Negkakis and Samara, 2017). The current operating cash inflow of the company is $ 2,49,34,000. Further, the investing activities of the company have also been higher. However, it has been found that the financing activities cash flow of the company has been lower in 2017 from 2015 and 2016. It leads to a conclusion that the free cash flow of the company is highest in 2017 in last 3 years.
It explains that the cash position of the company has been better and briefs about the better position and the performance of the company.
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THE CITADEL GROUP LTD (CGL) Statement of CASH FLOW |
|||
|
Fiscal year ends in June. AUD. |
2015-06 |
2016-06 |
2017-06 |
|
Cash Flows From Operating Activities |
1,02,07,000 |
1,03,78,000 |
2,49,34,000 |
|
Net cash used for investing activities |
-1,07,38,000 |
-27,75,000 |
-2,50,87,000 |
|
Net cash provided by (used for) financing activities |
2,13,82,000 |
-94,57,000 |
3,99,000 |
|
Net change in cash |
1,06,44,000 |
-1,22,32,000 |
-2,46,88,000 |
|
Free cash flow |
52,41,000 |
59,64,000 |
2,30,43,000 |
Comprehensive income statement of the company explains that the operating revenue items have not been added by the company in the annual report and has been shown as comprehensive income in the annual report of the company. The various items of financial statement such as provisions for the doubtful debts, taxation provisions etc are the items which are not reported in the cash flow statement of the company but these are shown in the income statement of the company to measure the performance (Gorry et al, 2017).
Figure : Comprehensive income statement
According to figure 1, it has been understood that comprehensive income items are those items which cannot be added by the company into its other financial statement due to accounting standards, AASB, IFRS regulations. It measures that the performance of the company also bases on the other items of the company and thus the comprehensive income statement is prepared by the companies.
On the basis of the understanding on the comprehensive income statements and its items, it has been found that the main reasons behind the not adding the comprehensive income statement into the income statement is accounting standards, AASB, IFRS regulations. It explains that these items are not related to the income statement. However, it impacts on the overall profitability and performance of the company (Tran, 2015). Thus, the company should not add these into the income statement.
Tax expenses describe about the company’s liability towards the government of the country. Tax amount is charged by the government as a fixed policy on the net profit of the company. The evaluation on the annual report of the company briefs that the total tax expenses of the company is $ 7101 million in current year which has been enhanced from 2016.
Tax expenses evaluation explains about the great increment in the tax expenses of the company and explains that this amount must be planned by the company again.
Annual report (2017) of the citadel group limited explains that the total accounting profit of the company is $ 2,13,12,000. So, the tax amount of the company should be $ 63,94,000 (21,312,000*30% = 6394000). However, recorded tax amount of the company is $ 59,06,000. It briefs about difference among the actual tax price and the accounting tax price. The differences have taken place due to changes into the various factors of the company (Eberhartinger, Genest and Lee, 2017).
Figure : Tax liability
Figure explains about all the factors and their amount due to which the tax amount has been changed. On the basis of the evaluation, it has been found that the dividends, research and development credit, imputation credit, provisions of the company etc are the main reasons due to which the tax amount of the company has been lowered than the estimated tax amount of the company (Li and Tran, 2016). The annual report of the company explains that the company is following the AASB 112 rules to record the tax expenses. The tax recording and the notes to accounts have been mentioned by the company to follow the disclosure policy.
In addition, the study has been performed on the deferred tax assets and liabilities of the company to measure the performance. The evaluation on the deferred tax liabilities of the company briefs that the amount of deferred tax has been improved by $ 8,83,000 in the current evaluation year (Tran, 2015).
In addition, it has been found that the deferred tax assets and liabilities which have been shown in the annual report of the company have been changed from last year in 2017. The deferred tax liabilities of the company have been improved by $ 15,22,000 whereas he deferred tax assets of the company have also been improved by $ 61,000.
These figures have shown about the differences among the accounting income and taxable income of an organization in a particular time period. The deferred tax liabilities explain about the higher accounting tax of the company than the actual tax of the company. The report explains that few changes are required by the company to manage the performance and position of the company (Brigham and Ehrhardt, 2013).
In addition, the annual report (2017) has been studied to identify the total tax amount which is either required to pay by the company or comapny has paid in advance for short term. The annual report of the company explains that the company has paid entire taxable income and expenses to the government and no amount has been left as current tax assets or current tax liability in the annual report of the comapny. The company has managed and recorded the entire tax expanse in such a manner that no confusion could take place. As well as the performance of the company could be improved (Bloomberg, 2018).
Further, the income statement and the cash flow statement of the company has been evaluated to identify the total taxable expenses of the company and the total amount which has been paid by the company as tax amount in the year of 2017. On the basis of the evaluation, it has been found that the cash outflow of the company because of tax is $ 54,21,000 and the taxable expenses of the company was $ 54,21,000. It briefs that the entire tax amount has been paid by the company (Annual report, 2017).
The accounting regulations and the recording system brief that the company has followed entire taxation system on the basis of the regulations and AASB 112.
Lastly, on the basis of the above study, it has been found that the taxation system of the company is quite impressive. Various information and knowledge have been gain from the assignment and the study on the real company. On the basis of the study, it has been found that the taxation recording system and he declaration bout each figures of the company was quite interesting. The company has focused on all the figures briefly.
In addition, it has been recognized that the deferred tax liabilities concept is quite confusing. An organization could check and neglect the factors of deferred amount from the organization. The difficult and surprising factor of the taxation system of the company was recording and presenting the various taxation figures in the annual report of the company.
Conclusion:
To conclude, the Citadel group limited is following the AASB 112 rules to manage and present the data of the taxation and other financial figures in the annual report of the company. the performance of the company has been improved from last year.
References:
Annual report. 2016. The Citadel group limited. Available at: https://investors.citadelgroup.com.au/investors/?page=Annual-Reports (accessed 22/5/18).
Annual report. 2017. The Citadel group limited. Available at: https://member.afraccess.com/media?id=CMN://2A1029784&filename=20170817/TTS_01884645.pdf (accessed 22/5/18).
Bloomberg. 2018. The Citadel group limited. Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=39927862 (accessed 22/5/18).
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage Learning.
Eberhartinger, E., Genest, N. and Lee, S., 2017. Practitioners’ Judgment and Deferred Tax Disclosure: A Case for Materiality.
Gorry, A., Hassett, K.A., Hubbard, R.G. and Mathur, A., 2017. The response of deferred executive compensation to changes in tax rates. Journal of Public Economics, 151, pp.28-40.
Ladas, A.C., Negkakis, C.I. and Samara, A.D., 2017. Accounting quality deferred tax and risk in the banking industry. International Journal of Banking, Accounting and Finance, 8(1), pp.1-19.
Landoni, M. and Zeldes, S.P., 2017. Should the government be paying investment fees on $3 trillion of tax-deferred retirement assets?
Li, E.X. and Tran, A.V., 2016. An Empirical Analysis of the Tax Burden of Mining Firms versus Non-Mining Firms in Australia. Austl. Tax F., 31, p.167.
Morningstar. 2018. The Citadel group limited. Available at: https://financials.morningstar.com/cash-flow/cf.html?t=CGL®ion=aus&culture=en-US (accessed 22/5/18).
Tran, A., 2015. Can taxable income be estimated from financial reports of listed companies in Australia?. Browser Download This Paper.
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