RegulationAccounting StandardsNo IFRS consistency in oil and gas sector says KPMG

No IFRS consistency in oil and gas sector says KPMG

Oil and gas industry still a long way off from consistency in their financial and reserves reporting

KPMG has said that oil and gas comapnies are not achieving full consistency
in their accounting under IFRS.

The firm’s survey ‘The Application of IFRS: Oil and Gas’ examined the
financial statements of 33 oil and gas companies from 14 countries, finding
flaws across a range of issues, including accounting, classification and
terminology.

Jimmy Daboo, KPMG’s Global Head of Energy & Natural Resources for
auditing and accounting said: ‘The oil and gas industry is one of the most
international and so stands to benefit significantly from the application of a
consistent global accounting framework such as IFRS.

‘Since the introduction of IFRS into the industry three years ago, there has
been progress – but not enough to give analysts and investors the full level of
transparency that IFRS promises.’

IFRS can cause massive volatility in value of derivatives linked to oil, gas
and petroleum contracts because they have to be recorded at fair value.

Last week, BP, regarded as one of the best in terms of its disclosures,
presented its third quarter results and entered into a comprehensive explanation
of the effects of fair value on its derivatives.

Daboo added that all oil and gas companies should be held to such high
standards:
‘With continued volatility of the oil price, and a steady flow of acquisitions
and disposals by oil and gas companies, it’s now more vital than ever that oil
and gas companies focus on the quality and comparability of financial and
reserves information.’

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