After the good times roll: Cleaning up when the party’s over – Auditing Oil and Gas Revenues and Financial Assurances for Site Remediation
Issues surrounding oil and gas revenue frameworks and financial assurances for site remediation are complex and multi-faceted. Moreover, due to the high materiality of the revenues involved (often a substantial proportion of the revenues of a given jurisdiction) and the considerable magnitude of the liabilities due to site remediation, the financial risks could be important. In some jurisdictions this risk could be compounded by fraud and corruption which are triggered by factors such as size of revenues, lack of transparency or the extent of discretion in implementation of related regulations by responsible officials.
Governments, as custodians of the public interest and stewards of natural resources whose extraction can generate substantial income and impact the environment negatively, must manage these resources effectively. This is done by enacting sound revenue frameworks, effective regulations and proactive management of the remediation process once the resource is exhausted. Governments must do so by implementing sound governance principles, managing risks and implementing effective controls. Audits constitute a very effective method of tracking the performance of governments in this respect and can help to maximise the public good for the citizens.
Referring to a number of good audit practices, the presentation will provide an overview of how audits of oil and gas revenues and financial assurances are planned, implemented and reported. In particular, the presentation will provide:
- Examples of questions that will help auditors to determine their audit focus;
- Examples of questions that will help auditors to acquire knowledge of business and to identify risks that may be selected as significant audit areas;
- Examples of audit objectives and audit criteria;
- Information on evidence sources that auditors will rely on during the audit examination phase; and
- Information on some of the challenges that auditors may face during audits of the oil and gas sector.