Implementation Challenge* IFRS for Oil & Gas and Utility Industries is a discussion paper that has been developed out of a debate on the topic of IFRS with the O&G and Utility industries during a series of client roundtables with the latest event taking place in October 2005 in London.
The report covers the following issues:
Common issues for Oil & Gas and Utility companies discussed:
- Emission rights
- IFRIC 4
- Income Statement Presentation
Oil & Gas Issues:
- IFRS 6: how much shelter?
- Impairment and cash generating units
- Overlift & underlift
- Jointly controlled assets, operations and entities
- Production sharing contracts
Utilities Issues:
- IAS 39: executory contracts, embedded derivatives and hedging
- Cash generating units
- Component approach
EU listed companies generally have had to prepare their financial statements in compliance with IFRS since the beginning of 2005. Many other countries, such as Australia, are also choosing to adopt IFRS as their national regulatory bodies move to converge with the standards.
The roundtable event, held in Autumn 2005, came soon after some of the companies had published their first interim information under IFRS. Others were further down the IFRS road, having adopted the standards in previous years. For all of them the decisions and difficulties around applying IFRS are immediate and real. The task of interpreting and applying IFRS in the context of their own companies and industries is especially demanding at the point of first-time adoption, but is also a continual challenge rather than a one-off.
Our Implementation Challenge* report highlights both the leading themes and the specific issues that companies are grappling with as they use IFRS in the oil, gas and utility sector.
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