BusinessCompany NewsIASB turns to oil after Shell

IASB turns to oil after Shell

A project that could help stop fiascos like oil group Shell's recent reserves overstatement is currently underway at the International Accounting Standards Board, writes Paul Grant.

Bold: Shell denies auditor sign off refusal

With most of the work for international financial reporting standards in 2005 out of the way by the end of the month, the board can turn its attention to other issues. The oil and gas industry is one of the areas on which it will focus.

Accounting treatments relating to oil companies have been drawn into the limelight, following calamitous events at Anglo-Dutch company Shell.

In January the group had to downgrade 20% of its oil and gas reserves, costing chairman Sir Philip Watts his job.

The situation was exacerbated last week when a further 470 million barrels were reclassified, resulting in a two-month delay in the publishing of its annual results and the annual general meeting. The company was later forced to deny that joint auditor KPMG had refused to sign off the accounts.

The difficulties have put further pressure on chief financial officer Judy Boynton. Shell appointed an internal audit committee to review its reserve bookings and will report at the end of April. Its findings could make Boynton?s position extremely unstable, along with other executives considered to have been involved with the overbooking.

Sir David Tweedie, chairman of the IASB, said: ‘We’ve had our hands full with IFRS till now. Accounting in the oil industry is something the Australians are dealing with, and they will report back in due course.’

The IASB currently has an exposure draft out for consultation on the exploration and evaluation of mineral resources, but this is unlikely to help the position at Shell.

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