Entities with Oil and Gas Producing Activities - Audit and Accounting Guide
First update in 2 years! This publication includes over 200 pages of invaluable guidance to help you improve your industry knowledge, fine-tune your strategies, and provide high-quality services to your clients.
This 2014 edition provides important technical guidance, summarizes new standards and practices, and delivers "how-to" advice for handling audit and accounting issues that will be critical to your success.
As fluctuating oil prices, off-shore drilling, and other energy-related issues impact the way your clients conduct business, it’s essential to have a keen understanding of the domestic and international topics and trends facing the oil and gas industry today.
Key Benefits Include:
- An updated illustrative representation letter that contains industry-specific representations.
- A new appendix which identifies PCAOB standards that broadly correspond with the Clarified Auditing Standards.
- Discussion and interpretive guidance associated with FASB ASU 2011-04, ASU 2013-03, and ASU 2013-04.
- Coverage of offsetting of derivatives, financial assets, and financial liabilities.
- FASB ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs
- FASB ASU No. 2012-04, Technical Corrections and Improvements
- FASB ASU No. 2013-03, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.
- FASB ASU No. 2013-04. Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date
Whether you are a financial statement preparer or auditor, it is critical to understand the complexities of the specialized accounting and auditing needed for the oil and gas industry. This comprehensive guide has been designed to be beneficial for a wide range professionals, including those within the oil and gas industry, as well as those practicing in small, regional, and large accounting and auditing firms.
Joint and Several Liability Arrangements
|4.86||The “Pending Content” in FASB ASC 405-40 applies to obligations resulting from joint and several liability arrangements for which the total amount under the arrangement is fixed at the reporting date, except for obligations that meet the criteria to be accounted for as:
|4.87||For the total amount of an obligation under an arrangement to be considered fixed at the reporting date there can be no measurement uncertainty at the reporting date relating to the total amount of the obligation within the scope of the “Pending Content” in FASB ASC 405-40-15. However, the total amount of the obligation may change subsequently because of factors that are unrelated to measurement uncertainty. For example, the amount may be fixed at the reporting date but change in future periods because an additional amount was borrowed under a line of credit for which an entity is jointly and severally liable or because the interest rate on a joint and several liability arrangement changed.|
The Importance of Exercising Professional Skepticism
|8.06||In accordance with AU-C section 200, the auditor should maintain professional skepticism throughout the audit, recognizing the possibility that a material misstatement due to fraud could exist, notwithstanding the auditor’s past experience of the honesty and integrity of the entity’s management and those charged with governance. Maintaining professional skepticism requires an ongoing questioning of whether the information and audit evidence obtained suggests that a material misstatement due to fraud or error may exist. It includes considering the reliability of the information to be used as audit evidence and the controls over its preparation and maintenance when relevant. Due to the characteristics of fraud, the auditor’s professional skepticism is particularly important when considering the risks of material misstatement due to fraud.|
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