3 Joint venture risk and disclosure requirements The acquisition of 143

3 joint venture risk and disclosure requirements the

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3. Joint venture risk and disclosure requirements The acquisition of 14.3% interest in PRL3 is material as the consideration to be paid by Santos amounts to US$187 million. This will increase the risk of misstatement of financial statements as investments in joint ventures are adjusted every year according to profit and loss, as well as other matters such as dividends or impairment loss in the joint vehicle after acquisition date. Adjustments to the investment in PRL3 depend on the effectiveness of communication between the investor and investee. If there is ineffective internal control between the two, it will result in Santos reporting outdated or inaccurate information in financial statements and therefore increase the risk of misrepresenting the financial statements. AASB 128 requires additional disclosures to be present. This includes the fair value of investments in associates and joint ventures, a summary of the joint venture’s financials and either all or part of contingent liabilities incurred jointly. Since the amount of disclosures required increased and the increased reliance on the joint venture’s financial statements, Santos should ensure that there is effective communication and internal control between Santos and the other joint venture participants.
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12 Bibliography Santos.com. (2019). [online] Available at: - report.pdf [Accessed 20 Oct. 2019]. Santos.com. (2019). Santos - ACCC clears way for Quadrant Energy acquisition . [online] Available at: - quadrant-energy-acquisition/ [Accessed 20 Oct. 2019]. Small Caps. (2019). Santos snaps up ConocoPhillips LNG assets for $2bn. [online] Available at: [Accessed 20 Oct. 2019]. Santos.com. (2019). Santos - Assets . [online] Available at: - do/assets/ [Accessed 20 Oct. 2019]. Santos Limited. 2018. Investor Day 2018 Presentation . [online] Available at: - mmboe-by-2025.pdf , [Accessed 20 Oct. 2019]. Santos.com. (2019). Santos - Vision and Strategy . [online] Available at: [Accessed 20 Oct. 2019] Santos.com. (2019). [online] Available at: - report.pdf [Accessed 20 Oct. 2019]. IBISWorld, I. (2019). Market Research Reports & Analysis | IBISWorld AU . [online] Ibisworld.com.au. Available at: - reports/mining/oil-gas-extraction.html [Accessed 21 Oct. 2019]. Clients1.ibisworld.com.au.wwwproxy1.library.unsw.edu.au. (2019). Database Access - UNSW Library electronic resource . [online] Available at: rmance.aspx?entid=62 [Accessed 25 Oct. 2019].
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