Mining companies face a complex regulatory and reporting environment that is complicated further by their geopolitical, environmental and safety concerns. With public, press, government and investor scrutiny of organisations growing in the wake of multiple financial scandals and widely publicised ethical lapses, senior management and boards of directors are increasingly compelled to ensure they have embedded processes in their operations to help protect their corporate reputation and brand image, not to mention to comply with government regulations, such as those required by Sarbanes-Oxley. Such protection has a direct impact on the organisation in terms of retaining shareholder value and a customer base that is sensitive to trust issues in the current environment. As a result, many organisations are now striving to create and maintain a culture of integrity-driven performance as well as high levels of control.
In addition, many companies around the world now or soon will have to prepare their accounts in accordance with International Financial Reporting Standards (IFRS). This presents challenges for companies across all industries, but gives rise to some particular difficulties for those in the mining sector.
- There is a broad range of mining-specific issues for which IFRS contains little or no guidance.
- There are a number of standards for which mineral products have specifically been scoped out.
- There is a long list of topics for which the guidance within IFRS is difficult to apply to the mining industry, for example, the determination of functional currency; the treatment of commissioning costs when new mines are entering production; the application of impairment rules, particularly in periods of unusually high or low commodity prices and exchange rates, etc.
How PricewaterhouseCoopers can help you
PricewaterhouseCoopers is dedicated to helping our clients achieve integrity-driven performance. We assist them in creating a framework for effectively managing key governance, risk and compliance activities. Our governance, risk and compliance specialists have knowledge in a range of these areas – from pro-active business culture management to risk, control & fraud prevention and value management, to internal audit, sustainability and technology management. All of these come together to help clients envision, improve, operate and sustain a fundamental culture of business integrity and control. We have helped our mining clients with:- Capital efficiency – the failure to achieve cost reduction or to stay within capital budgets;
- Internal control failure;
- Poor risk management processes;
- Safety, health and environmental concerns;
- Legal and regulatory compliance, specifically mining charter compliance;
- Operating cost efficiency – including IT failure and consequent business interruption;
- Corporate governance practices and stakeholder relations;
- Contract management; and
- Fraud and corruption prevention.
PricewaterhouseCoopers teams around the world have worked with an impressive list of mining clients in implementing IFRS, and have considerable experience in helping mining companies to deal with the challenges described above. To combine our collective experiences, and promote consistency across our clients, we have established a mining IFRS group comprising mining specialists from key territories where IFRS is currently being adopted or already applies. The group has developed mining-specific solutions for a wide range of accounting issues and plays a key role in resolving new issues that emerge amongst our mining clients.
