Where : Road from Jugiong to Cootamundra, New South Wales
When : Monday 21st July, 1-00pm
Weapon : Panasonic Lumix TZ3
Here's a beautiful spot, up in the range on the winding road from Cootamundra to Jugiong, 400kms west-south-west of Sydney.
It's lambing time. Beautiful, just stunning ... distant hint of mint sausce.
Wilson Pharaoh is Finance Director of one of the ASX Top 200 listed companies. Just like 999 other Finance Directors, Wilson
Suddenly, bean counters like our Wilson Pharaoh are recognising that within between 5 and 17 months they will have to introduce front-end costing systems to calibrate the drivers and report the financial impact of greenhouse gas emissions and market trading. This requires a big commitment to new costing, financial accounting, reporting, auditing and computer systems right now.
Wilson
This time though, Wilson
What is not so clear to him, is how to establish the costs of creating emissions, in terms of materials, labour and expense. The most sensible approach might be to adopt a standard costing approach to account for expected and actual emissions using transfer pricing across each of his company?s business units and subsidiaries. Wilson Malaysia New Zealand Bangalore
To properly calibrate expenditure, Wilson believes it will be necessary to establish the standard unit costs and capture the actual associated non-financial data related to emissions, as well as the financial data, for example like this :-
In the absence of a more robust foundation for the derivation of unit data, a proxy standard cost per tonne of CO2 equivalent could then be set initially at
(a) the European benchmark rate, being geared to Mid May 2006 at 8.6 Euros per tonne of CO2 equivalent; or
(b) a local market value for the trade of allowances, perhaps between $5 and $8 a tonne; or
(c) the price rate set by the Australian regulator (whoever that may be) as the fine or penalty for exceeding the allowance ? in the EU the fine has been set at 40 Euros per tonne of CO2 equivalent, against a Mid 2006 EUETS market price 8.6 Euros per tonne (destined to rise to 100 Euros at some time in the future).
Pharaoh can see that there is another accounting dilemma here - he may start with a zero coupon certificate or allowance, and end the year either meeting that allowance in which case there is a nil result, or he ends up with either creating more CO2 equivalents in emission, or a shortfall.
That is, it should be possible to gradually build up an asset or a liability from a zero start. He will have to make a provision for a future "penalty" or "benefit" ? perhaps on a monthly accrual basis.
After some thought, Pharaoh has concluded that costing of emissions should take place outside of the books, with summary entries transferred from offline stand-alone systems.
These entries would be generated by extrapolation, multiplying the tonnes of CO2 equivalent by the proxy standard unit costs, with the variances being booked to the P&L monthly, just as in a common standard costing system. By year end any under or over emission can be identified as a tradable asset if emissions have fallen short of the allowances provided or, if emissions have exceeded the allowance, written off to cost of sales or taken to the Balance Sheet as a liability.
In this scenario, there would be (a) acquittal variances caused by the difference between the value and quantity of emissions allowances (b) output variances caused by the difference between the quantity and source mix of CO2 equivalents generated by the resources consumed.
Pharaoh still has many questions as there is a lack of clarity around the financial nature of emission allowances, permits and certificates.
For example :-
1. Are they financial or negotiable instruments, or both ?
2. Are they assets ?
3. Can they be traded internationally ?
4. Can they be securitised - eventually into CDOs and junk bonds ?
5. Are they androgynous, neither assets nor liabilities - but establish their final orientation during the financial year ?
6. Are they to be defined during a financial year for example for ASX reporting, like so many capital items in emerging market economies, particularly in the state owned corporations of developing countries, as "Balance Sheet Items of a Nature Yet to be Determined" ?
7. Can they be carried forward ?
8. Can they be used as collateral ?
9. Are they all homogeneous - or are they infinitely inter-changeable ?
Pharaoh is finding it really difficult to deal with instruments that on acquisition have an unknown future status or value ? they may be assets if they can be sold or they may be liabilities if they have to be treated like an invoice or demand notice, fine, penalty or tax assessment.
Certainly at year end, they may have a value, but what about on Day 1 ?
? If an asset, is it similar to a licence to operate within certain parameters?
? Is it an economic incentive to reduce emissions?
? Is it a derivative ?
? Is it a negotiable instrument ?
? Can it be hedged ?
Finally, Wilson Pharaoh is aware that there has been a great deal of churning in the world of Accounting Standards about treatment of the allowances held (as an asset) and the treatment of the obligation to deliver allowances for emissions that have been made (as a liability). The current wisdom seems to be that the allowances should be measured at "fair value" (whatever that means) and any changes in value put through the Profit and Loss account as they emerge.
Pharaoh is also aware that his own Big 4 firm of auditors has been participating internationally in all sorts of international forums, yet still does not have the answers and certainly will not give any guarantees on what will happen from the audit point of view ... Y2K all over again.
So far, Wilson
If the company does not hold enough certificates, it will be forced to go to the spot market to buy them - which raises the possibility of a secondary market in hedged instruments - or cop a fine at some penalty rate. During the accounting period, it appears that it would be prudent to accrue any emerging liability or asset (if the emissions actually being generated are short of the expected amount or allowance).
Should a company buy allowances on the market "just in case", the treatment is still to be determined, as this investment may be in the nature of insurance, speculation or good business caution.
This is why Y2.01K is looking so very good to consulting accountants - and why it has got Wilson Pharaoh worried about his knickers.
Where : Waitara, New South Wales
When : 9-50am, 24th January, 2008
Weapon : Panasonic Lumix TZ3
So, it's just a mess then ? Yes. So, er ...... ?
It used to be I think a Brodie Lighthouse being one of a chain of similarly branded retail lighting emporiums, characterised by these rounded, glassy showrooms.
Here we are then with style being created by the product being commercialised, nothing to do with art, sentiment, environment, functionality, climate or materials. Who knows what's on the upper floors ? Massage parlour, pilates gym, tae-kwon-do school, an office ?
Set the fuse !
Where : Queen Victoria Building
: George Street, Sydney
Weapon : Panasonic Lumix TZ3
The Queen Victoria Building, known as the QVB, was designed by George McRae and completed in 1898.
Here we can see its 4 floors of upmarket boutiques housed within an elaborate Romanesque architecture, originally contrived so that its construction would require the employment of as many out-of-work craftsmen as possible ? stonemasons, plasterers, and stained window artists - in a worthwhile project.
Over many decades, change saw the original concert hall become the city library, offices proliferate and more tenants move in, including piano tuners, palmists and clairvoyants. Drastic remodelling occurred during the austere 1930s - eventually the main occupant became the Sydney City Council.
The QVB was restored to its previous decadent glory in the 1990s.
It stands now as witness to a vision for the building and the superb craftsmanship of the artisans who put it all back together again some 15 years ago. Its centre inner glass dome and exterior copper-sheathed dome, stained glass windows, 19th century staircases, restored arches, pillars, balustrades and mosaic floors maintain the previous integrity of the building.
So today, it is the most wonderful shopping environment - but you will need a gold-plated credit card !
Yes, who needs a plumber .... when you have a wife at home !
On Wednesday, the wooden paling fence that divides and separates our property from our neighbours' place, fell over. Well, SWMBO had been chopping down some bougainvillea (pretty, but nasty stuff), pulling out the roots, some of which were anchoring the fence posts. Obviously, these had rotted away, so the fence fell over like a line of tents at a girl guides' camp.
Unfortunately, some of it fell against said neighbours' house, smashing a roof downspout and the linkages into the storm water drain. After getting out the chainsaw, pulling it back up and propping it, we examined the damage. You can see the broken, brown downpipe on the brick wall here, and why you need two elbow joints to make the connection into the pipe in the ground that drops into the stormwater drain.
The fitting is complex, in that there is a rectangular connector to the downspout incorporating a circular connector that fits into one bend or elbow, then a small piece of horizontal piping, which fits into another elbow joint into the round entrance, and so into the vertical dropfeed into the stormwater conduit.
"No problems" says SWMBO ... I was on the point of calling a plumber myself, but "Not on your life" she says, "I'll fix that myself". When she is in this mood, I have found it best to just, you know, go along for the ride.
So, this afternoon (Thursday), she went off to the hardware shop, only to find that the old plumbing is in imperial dimensions, and the new stuff is metric ... yikes ! At this point. I would have capitulated, but not this girl.
Not to be phased, SWMBO bought a metre of pipe and two elbow joints. In the pouring rain, she removed the rest of the debris and broken piping, measured and hacksawed the lengths, fitted the two elbow joints, and "Bingo" ... job done. Cost $29 ... cost saving probably $75 call-out fee, plus labour say 1 hour for a plumber $70 and materials at their rates, say another $55, total $200 all up.
Worth her weight in gold, what a girl !
Where : Ku-ring-gai Chase National Park, New South Wales
When : 9-40am, 11th November, 2007
Weapon : Panasonic Lumix TZ3
I took this shot just a few weeks ago, but as we are going through a warm spell, I was just reminded of their plight, hoping that they are now free again.
These poor chaps have been rescued and placed in a safer compound than their natural habitat, and will be kept here against their will until the undergrowth comes back, and there is some food for them in the native forests. Strangely enough, this will only be a few weeks - so long as we have no more fires. The bush seems to love a good fire - is sets off the new growth with a passion !
These wallabies normally live in the free roaming Ku-ring-gai Chase National Park. In terms of size, the big fellow at the back is about 5 feet tall in that pose .. maybe 6 foot if he draws himself up and stands on his tail. You don't want to get kicked in the great expectations by this boy.
I often wonder why we have so many pyromaniacs who think it is funny to set fire to our National Parks. These lovely survivors look so devastated, forlorn and vulnerable, don't they ? They don't see the funny side ... but I guess it's not too too much fun when somebody has deliberately barbecued your home, torched your land and turned your family to toast.
Where : Marulan, New South Wales
When : 12-45pm, 17th February, 2008
Weapon : Panasonic Lumix TZ3
I drove my daughter down to Wagga Wagga on Saturday, where she is just starting another year at Charles Sturt University. We always stop for a cup of tea and a sandwich at Marulan. God knows why, it's just a tradition.
This is Marulan, a town in the Southern Tablelands region of New South Wales, near Goulburn. Well, hardly a town - just a few houses, a pub and an ould railway station.
Marulan lies close to the Hume Highway, which used to run through the town until the highway bypassed the town. Marulan lies on the 150th meridian. When I say on the 150th meridian, I mean right on it ! The "line" runs right through the spot where I am standing.
It's so exciting.
