In recent months both the FASB and the SEC have taken actions affecting oil and gas accounting. The provisions of the FASB's tentative Statement of Financial Accounting Standards, Disclosures about Oil and Gas Producing Activities, are briefly summarized in this section. In addition, the SEC issued Staff Accounting Bulletin 47 providing interpretation for the SEC's staff on certain oil and gas accounting matters. The entire text of this important SAB is presented on pages 133-157 of this issue.

Current Developments. Fall/Winter 1982, pp. 5‑6.

A new section of the Journal providing a forum for letters from readers, questions for discussion, etc. is inaugurated in this issue.

Accounting Forum. Fall/Winter 1982, pp. 7‑10.

Mr. Kelley discusses the way in which changes in reserve estimates that are made during the year affect previously issued interim statements for the year. His analysis deals essentially with the definition of the "accounting period." Different approaches to handling the necessary adjustment are discussed.

Accounting for the Effects of Reserve Changes on Interim Results. Kelley, Robert, Fall/Winter 1982, pp. 11‑20.

Mr. Guest reports on a survey of financial reporting techniques used by drilling funds in reporting to owners. The author presents illustrative financial statements that may be used by these entitles.

Financial Reporting by Drilling Funds. Guest, J. Ike, Fall/Winter 1982, pp. 21‑36.

May and O'Neill summarize the major reasons why oil and gas reserves may be inappropriately determined and explain how these problems affect the internal auditor. Then they present highlights of an internal audit program including a "Controls Questionnaire," an "Individual Property Review Sample Selection," a "Property Review Data Sheet", and "Reserve Audit Procedures."

Internal Audit of Oil and Gas Reserves. May, Jr., Alan and O'Neill, Donald B., Fall/Winter 1982, pp. 37‑46.

The authors criticize the FASB's Interpretation dealing with exploratory wells that are being drilled at the end of the accounting period. They argue that the Interpretation is faulty from both a theoretical viewpoint and a practical viewpoint.

A Review of FASB Interpretation No. 36. Wilkerson, Curtis and McEntee, Matt, Fall/Winter 1982, pp. 47‑56.

Both shortages and oversupplies of equipment, materials and supplies have significant impacts on prices of those items. Frequently the operator of Joint Accounts must pay "premium prices" for materials or may have inventories carried at costs in excess of current prices. Mr. Patrick discusses the impact of these price variations on the job of the Joint Account auditor.

Auditing Joint Interest Operations in Periods of Shortages or Oversupply of Materials. Patrick, Donald A., Fall/Winter 1982, pp. 57‑68.

In this article (the first dealing with taxation that has been published in the Journal) the authors examine in detail the facts and conclusions of the Keller case, dealing with deductions for prepayment of IDC, and the implications of the case.

Tax Court Assaults Prepaid IDC. Cummings, James R.; Dean, Kevin D.; and Derksen, Brian L., Fall/Winter 1982, pp. 69‑82.

This report presents the results of a survey of 22 companies using the full-cost method. The survey asked accounting officials in these companies how certain transactions and events that have caused accounting problems under this method are handled. A tabulation of responses is presented.

A Survey of Full-Cost Accounting Practices. Extractive Industries Accounting Research Institute, Fall/Winter 1982, pp. 83‑98.

The authors present the results of an analysis of changes of estimates of proved reserves as reported by 58 oil and gas companies for the years 1977, 1978, and 1979. The authors conclude that revisions of estimates of oil and gas reserves are not as significant as generally believed and that the FASB should not reject value-based disclosures on the theory that reserve estimates are unreliable.

A Study of Revisions of Previous Estimates of Proved Oil and Gas Reserve Quantity Information. Walther, Larry and Evans, Mary Kay, Fall/Winter 1982, pp. 99‑108.

Ms. Wright reports on her research into the effects of news announcements on stock prices of oil and gas producing companies. Ms. Wright traced all news announcements relating to seven companies appearing in the written media during the three-year period, 1978 through 1980. She concludes that news stories regarding developmental and operational activities were most significant in affecting prices, while reports of explorational activities were also significant. However, announcements of financial events and other matters had little impact on stock prices.

A Study of Effects of News Reports on Stock Prices: Implications for Reserve Quantity Disclosures. Wright, Charlotte, Fall/Winter 1982, pp. 109‑116.

Professor Etebari studied the prices of stock of 10 oil companies (5 of which received oil from the Middle East and 5 of which did not receive oil from this source) during the period around September 22, 1980, when Iraq invaded Iran. He concludes that the war increased the "returns" on stock of companies that received no oil from the Middle East, but had minimal effect on returns on stocks of companies that received oil from the Middle East.

The Reaction of Oil Company Share Prices to the Outbreak of the Iranian-Iraqi War. Etebari, Ahmad, Fall/Winter 1982, pp. 117‑124.

Mr. Avard reports on a research project in which he attempted to determine the attitudes and opinions of financial analysts toward the FASB's Proposed Statement on disclosures. He concludes that there is strong support for the disclosures already required under FAS 19, but that support for the standardized measure of discounted cash flow is limited.

Financial Analysts' Evaluation of Proposed Disclosure Rules for Gas Producing Companies. Avard, Steve, Fall/Winter 1982, pp. 125‑132.

The entire text of this important SAB is reproduced.

Securities and Exchange Commission, Staff Accounting Bulletin No. 47. Securities and Exchange Commission, Fall/Winter 1982, pp. 133‑157.