Entities With Oil and Gas Producing Activities — AICPA Audit and Accounting Guide

Updated for the new Risk Assessment Standards as of May 1, 2007, this Audit and Accounting Guide summarizes applicable practices and delivers "how-to" advice for handling almost every type of financial statement. It describes relevant matters, conditions, and procedures unique to the oil and gas industry, and illustrates treatments of financial statements and reports to caution auditors and accountants about unusual problems.

Preface

This guide describes relevant matters unique to the oil and gas producing industry in order to assist the independent auditor in auditing and reporting on financial statements of entities performing these activities.

Generally accepted auditing standards (GAAS) and accounting principles are applicable in general to the oil and gas producing industry. The general application of those standards and principles is not discussed herein; rather, this guide focuses on the special problems inherent in auditing and reporting on the financial statements of an entity with oil and gas producing activities.

The guide concentrates on the domestic exploration and production activities of oil and gas companies and generally does not address the special problems related to other activities of integrated oil and gas companies or foreign activities. The guide also does not differentiate between onshore and offshore activities, because their financial accounting considerations are similar.

The guide provides information regarding statutory rules and regulations applicable to the industry. Also included are illustrations of the form and content of financial statements for entities with oil and gas producing activities. Rules and regulations, as well as applicable authoritative accounting and auditing pronouncements, are subject to change and revision. Therefore, the auditor should keep abreast of developments affecting these items.

The guide contains certain suggested auditing procedures, but detailed internal control questionnaires and audit programs are not included. The nature, timing, and extent of auditing procedures are a matter of professional judgment and will vary depending on the size, organizational structure, existing internal control, and other factors in a particular engagement.