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Management Accounting Course

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Mgt. Accounting and Production Sharing Agreements for the Oil & Gas Industry (1 day)

Course Details

Code:9015
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Introduction

The internal reporting challenges that face accounting professionals in oil and gas companies mirror those relating to external reporting. The particular nature of oil and gas industries and their activities determine the way in which their operations and financial condition are reported. While the external reporting environment is largely regulated by accounting standard setters, there are no parallel accounting standards relating to internal reporting.

This one-day course summarises and discusses the information requirements of oil and gas company management and goes on to relate these requirements to the accounting and reporting procedures that are common in production sharing agreements (PSA) between national authorities and private sector oil companies.

The programme answers questions such as:

  • What accounting issues are particularly relevant to the oil and gas industry?
  • Which steps should be undertaken to establish a strong management accounting system?
  • How are appropriate management accounting procedures established?
  • What are the characteristics of production sharing agreements?
  • What are recommended best practices to meet PSA accounting and reporting requirements?
  • In what areas are control and reconciliation issues expected to arise and how should they be addressed?

Learning Objectives

  • Appreciate the role of management accounting in the oil and gas industries
  • Learn the steps and procedures recommended to establish a strong management accounting system
  • Appreciate the differing needs of various users of financial information
  • Comprehend the nature of Production Sharing Agreements (PSA)
  • Understand the PSA accounting and reporting requirements
  • Consider the implications of these reporting requirements and determine how they may be addressed
  • Ensure maximum convergence between reporting processes

Who Should Attend

  • Financial accountants in the oil and gas industry
  • Management accountants of IOC’s
  • Finance staff responsible for PSA’s
  • IT staff responsible for developing G/Ls for IOC’s
  • Auditors with responsibilities for PSA audits
  • Staff of revenue authorities and national oil companies working with IOC’s
  • Financial analysts seeking to improve their understanding of PSA operations

Topics

  • The Characteristic Features of the Oil and Gas Industry
    • Scale of operations
    • Nature and timing of cash flows
    • Risks
    • Determination of success
  • Accounting Issues in the Oil and Gas Industry
    • Capitalisation vs. expense
    • Exploration costs
    • Depreciation
    • Impairment
    • Site restoration costs
    • Revenue recognition
    • Reserve quantities
  • Management Accounting Issues
    • Relationship of management accounting to external financial reporting
    • Selection of management accounting policies
    • Identifying the audience(s) for management accounting information
    • Creating a chart of accounts
    • Selecting cost centres
    • Selecting cost elements
    • Expenditure reporting vs. commitment reporting
    • Reporting expenses
    • Reporting capital expenditures
  • Management Accounting Procedures
    • Detail of reporting
    • Frequency of reporting
    • Overhead allocation
    • Responsibility accounting
    • Introduction to joint venture accounting issues
  • Production Sharing Agreements
    • Nature of production sharing agreements
    • Comparison with other risk sharing arrangements
    • Typical provisions of a PSA
  • Accounting and Reporting Under Production Sharing Agreements
    • Typical provisions of PSA accounting procedures
    • Allowable and non-allowable expenditure
    • Cost recovery
    • Profit oil and gas
    • Ownership of assets
    • Non-financial information and reporting
  • Reconciliation Issues
    • Between external financial reporting and internal management accounts
    • Between internal management accounting and PSA accounts
    • Treatment of tax
    • Treatment of activities outside the scope of PSA
    • Audit
    • Benefits of convergence

Teaching Method

  • Group live instruction
  • Explanation and demonstration of the accounting issues relating to management accounting and production sharing agreements
  • Presentation and discussion of worked examples
  • Group discussion and interactive participation is encouraged
  • All participants receive a comprehensive binder containing copies of the presentation slides, handouts and other course materials

Instructors

The instructor for this course will be drawn from one of our core faculty of subject matter experts. Further details will be published at the earliest opportunity.

Venue

Our seminars take place in 4 star professional conference facilities, generally in city-centre hotels like the Marriott, Sheraton or Hilton brands. Detailed Joining Instructions are sent to all registered delegates by email approximately one month before the event. The Joining Instructions will confirm exact venue details and nearby (or onsite) hotel recommendations with bedroom rates where available. Coffee and lunch will be provided.

CPE/CPD Accreditation

IASeminars is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org .

 

Field of study: Accounting

Prerequisites

Basic knowledge of accounting processes and objectives. No advance preparation is required for this course.

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