US oil firms face scrutiny over accounts
The Securities & Exchange Commission is looking to clamp down on oil companies that overbook the value of their reserves.
In the past, oil companies were put under pressure to overbook reserves in order to improve market conditions and increase their borrowing power, according to the FT
But following the collapse of Enron, and increased scrutiny over the valuation of assets, oil companies could be forced to better explain the methodology used to arrive at the figures, which could see millions of pounds wiped off the value of their assets.
Companies are already being asked by the SEC to explain in a letter how they calculated this value, but this could just be a ‘good faith’ attempt by the watchdog before more stringent rules are considered.