The FASB will be probably be issuing a new Statement on Accounting for Income Taxes in the first quarter of this year. A new Discussion Memorandum from the FASB considers the issue of a change in the basis of accounting. SEC topics of concern include accounting and disclosure of uncertainties, range of probable losses, insurance coverage, "reasonably possible" disclosures, contingencies for future environmental costs, financial instruments embedded within other financial instruments, accounting for income taxes, valuation allowance, recognition of NOL carry forwards, SAB No. 74, and OPEBs. An informal discussion with SEC staff touched on the topics of SFAS No. 69 disclosures, revenues from contracting out excess pipeline capacity, hedging activities in reserve based disclosures, Section 29 credits in reserve based disclosures, new cost centers, full cost and successful efforts ceiling tests, accounting for prepaid price swaps, hedging of oil and gas production, goodwill, environmental matters, and gas imbalances. Proposed revisions to the Framework as a result of a Committee of Sponsoring Organizations of the Treadway Commission exposure draft on internal control include defining internal control, streamlining components to eliminate unnecessary overlaps, and problems of management reporting.

Current Developments in Financial Accounting and Reporting. Jennings, Dennis R., Spring 1992, pp. 1‑15.

Service ruling involving Section 29 credits include definition of "well drilled," definition of "property" for Section 29 purposes, and sales triggering Section 29 credit. Other Service news involves the issuance of temporary and proposed regulations under Section 43 dealing with enhanced oil recovery (EOR). The Tax Court rulings concern at-risk rules, alternative minimum tax, IDC recapture, trusts taxed as associations, S corporations as passive income sources, AMT passive losses, and gross income for percentage depletion.

Current Update in Oil and Gas Taxation. Mark, Richard, Spring 1992, pp. 16‑23.

The Financial Reporting Committee approved Guidelines for Use in Determining Finding/Acquisitions Costs and Accounting Treatment for Environmental Costs--1990. The Revenue Committee is reviewing six revenue modules and rewriting Bulletin #7. The Education Committee has approved the second PASOK module on oil and gas operations training. A new Bulletin #32 and a revision of Bulletin #4 were approved by the Joint Interest committee. The Audit Committee is circulating for review Guidelines for an internal Review of a Gas Plant. The Tax Committee mailed a 1991 update of the Severance Tar Guide in February. The new officers, directors, and standing committee chairmen for 1992 are announced.

COPAS: An Update. Westbrook, Jack, Spring 1992, pp. 24‑28.

The topics covered in this issue's Accounting Forum are profit on sale of leases to partnerships, treatment of management fees, and effects of price increases subsequent to balance sheet date on cost ceiling.

Accounting Forum. Brock, Horace, Spring 1992, pp. 29‑31.

Finding costs are commonly defined as the average costs of adding new proved reserves through drilling over some relevant time period. The disclosure of finding costs is not mandated by current accounting standards. Voluntary disclosures in 1990 range from less than one-third among majors, diversified companies, and pipeline and utility firms to approximately two-thirds among independents. This article reports on the voluntary disclosures found in the 1990 annual reports of sixty large oil and gas companies. The voluntary disclosures are not completely comparable, reflecting the lack of a current accounting standard.

The Disclosure of Finding Costs by Oil and Gas Companies: 1990. Cappel, James J., Spring 1992, pp. 32‑46.

The lack of consistency in defining and reporting on finding costs has resulted in problems in comparing the efficiency of oil companies and predicting their future profitability. Investment bankers and security analysts rely on finding costs as disclosed in annual reports when making investment decisions. The dilemma of non-comparability brought on by differences in conversion ratios, operations, accounting methods, product quality, and cost classifications argues the need for a standardized finding cost calculation.

Finding Costs Methodology: Alternative Approaches. Gaddis, Dwight, Spring 1992, pp. 47‑52.

Economic conditions in the last several years led twenty-six full cost companies to petition the SEC for a temporary waiver and rule modification to the full cost ceiling test. The SEC refused to grant the waiver, although the request and accompanying position paper were well supported and documented. The authors explore the economic and theoretical arguments supporting the waiver request and report on current efforts to persuade the SEC to modify the full cost ceiling test.

The Securities and Exchange Commission and the Full Cost Ceiling Test. Nichols, Linda M. and Gallun, Rebecca A., Spring 1992, pp. 53‑61.

The Omnibus Budget Reconciliation Act of 1990 reversed a 70-year trend in U.S. energy tax policy by shortening the time allowed an investor to recover costs incurred in exploring for and developing new U.S. petroleum resources. Craig G. Goodman, who served as director of oil policy and as Director of the Office of Energy Tax Policy within the Department of Energy under the Reagan and Bush administrations, brings a unique insight into the significance of this legislation to the oil and gas industry.

Impact of the Omnibus Budget Reconciliation Act of 1990 on Investments in Domestic Petroleum Extraction. Goodman, Craig G., Spring 1992, pp. 62‑77.

Through a survey of 340 CEOs of major oil firms, the writers have evaluated the decision making process used in evaluating plays and allocating resource for financing exploration efforts. The authors analyze the influence of factors such as sources of investment capital, information and data sources, frequency of use of quantitative methods, frequency of evaluation of plays, and the impact of budget size on the decision to invest in exploration.

Strategic Resource Allocation Processes and the Use of Quantitative Methods in the Evaluation of Plays in Oil and Gas Exploration. Hailey, William A.; Ryan, Jr., Edward J.; Barnes, Cornelius W.; and Woodruff, Charles K., Spring 1992, pp. 78‑95.