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Unformatted text preview: any, limited by guarantee. All rights reserved. Impact of IFRS: Oil and Gas 3 Accounting and reporting issues
Early identification of differences is critical to a successful conversion project
The first and fundamental area to tackle is accounting and reporting. Getting a timely and accurate assessment of the impact of IFRS and ensuring that the `gap analysis' is correct are critical steps to a successful transition. Based on our experience of IFRS conversions, we outline below the main sector-specific accounting issues for oil and gas companies to consider when converting to IFRS, and provide a glimpse of the questions to be considered. This is not meant to be a comprehensive list; indeed it does not cover many areas that oil and gas companies need to consider. Owing to their generic nature, there are material accounting topics (such as defined benefit pension scheme accounting, share-based payments, presentation of financial statements and business combinations) that we have not considered in this publication. 1 2 3 4 5 6 7 8 Exploration and evaluation (E&E) assets Depletion, depreciation and amortisation (DD&A) Impairment of non-financial assets Decommissioning and environmental provisions Joint arrangements Revenue recognition Reserves reporting Financial instruments In our experience, these issues are significant to oil and gas companies for the following reasons. Issues may be pervasive across the sector and will require significant time and cost to evaluate and implement; for example, accounting for E&E expenditure and assets. Conversion may have a significant impact on information systems, accounting processes and systems. For example, the impact of different depreciation and amortisation policies may lead to adjustments in the asset sub-ledger. Accounting requirements may require careful consideration of contract terms, for example those terms outlined in joint arrangements. Judgement may be required in selecting significant accounting policies that impact future results. Accounting and reporting requirements may be subject to future change for which organis...
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