Financial Reporting Standard No. 12, Provisions, Contingent Liabilities and Contingent Assets (FRS 12) became mandatory in March 1999. Although the impact of FRS 12 is perhaps likely to be most pronounced for companies in extractive industries, the standard may also affect other UK companies, particularly those with high levels of provisions. A study of the impact of FRS 12 is especially important in light of the recent movement towards the use of international financial reporting standards for reporting purposes in Europe as well as in many other countries around the world. Consequently, this paper extends prior research by assessing the impact on company value of the introduction of the standard on provisions and contingencies not only on extractive firms, but also on UK firms in other industries.

FRS 12: An Inter-Industry Study of Its Impact on Share Prices. Jetty, Julianna and Danbolt, Jo, Fall/Winter 2006, pp. 1‑22.

Fewer audit providers and more audit responsibilities have combined to increase audit fees. Less certain, however, is the nature of the resulting audit fee structure for clients in the energy sector. In the current audit services market, do energy firms pay more for a Big Four auditor because of the brand name and expertise that the auditor can provide? Are there differences among the Big Four in the audit fees they charge their energy clients?

Audit Fees in the Energy Industry: Is There a Premium for Big Four or Specialist Auditors? Wilson, Thomas, Fall/Winter 2006, pp. 23‑35.

To secure a stream of benefits for the future, informed decisions with long-term implications involving the outlay of current funds are sometimes necessary. This is especially true in the oil and gas industry. Besides the capital intensive nature of the industry, there are other features which suggest that capital budgeting may be more sophisticated than that found in other sectors.

Capital Budgeting in Upstream Oil and Gas: A Review of the Techniques, Processes, and Context. Johnson, A. Michael, Fall/Winter 2006, pp. 36‑54.

Current international GAAP allows companies to choose either the full cost (FC) or the successful efforts (SE) method to report the results of their exploration and production activities. These two methods are conceptually different and can produce radically divergent reported results. Since the accounting method adopted determines the timing, recognition, and amortization of exploration and development costs, it follows that method of choice inherently confers some discretionary control over capitalized expenditures and thereby empowers managers to engage in income management.

A Critical Analysis of the Use of Accounting Standards' Comment Letters as Lobbying Tools by Extractive Industry Firms. Asekomeh, Ayodele Oshokamere; Russell, Alex; and Tarbert, Heather, Fall/Winter 2006, pp. 55‑76.

FASB 143 dramatically changes the manner in which companies account for the dismantling, removal, and abandonment (DR&A) of oil and gas facilities. In the final installment of this four-part series on the application of FASB 143 to offshore decommissioning, a methodological framework is developed to assess the fair market value of decommissioning obligations.

Accounting for Offshore Structure Retirement Obligations IV: Fair Market Value. Kaiser, Mark J., Fall/Winter 2006, pp. 77‑93.

Disclosure of a firm's proved and probable oil reserves is a key performance indicator in the oil and gas industry. The Canadian oil and gas industry—which requires the disclosure of probable reserves—is receiving heightened interest in the US as the best alternative to Middle East oil. If proved and probable reserves have a significant influence on share prices, then inappropriate estimation of these natural resources by incumbent managers or a lack of adequate accounting regulation can cause losses to uninformed investors.

Proved or Probable Oil Reserves: Does it Matter? An Empirical Study on Canadian Oil and Gas Companies. Donker, Han; Ng, Alex; and Rai, Kuldip, Fall/Winter 2006, pp. 94‑102.

The 79th Legislature of the State of Texas completely revamped the business tax structure for Texas. Effective for returns due on or after January 1, 2008, the tax will be based upon a gross margin calculated by reporting revenues, less either cost of goods sold (COGS) or compensation. A review of the statutes indicates that the new margin tax is significantly more complicated than the current franchise tax and, consequently, will require more preparation time.

The New Texas Margin Tax and the Implications for Oil and Gas Producers. Pulliam, Robert D., Fall/Winter 2006, pp. 103‑109.

Broadly speaking, eco-efficiency involves maximizing the efficiency of production processes while minimizing impacts on the environment. According to the World Business Council on Sustainable Development (WBCSD), eco-efficiency is achieved when the delivery of competitively priced goods and services progressively reduces ecological and environmental impacts. In an eco-efficient system, inefficient use of environmental inputs and/or outputs, including pollution and waste, are inefficiencies that can be reduced or eliminated through process improvements and innovation. Fundamental to eco-efficiency is adoption of a management philosophy that stimulates the search for environmental improvements that yield parallel economic benefits

Current Developments in Environmental Issues. Wright, Charlotte, Fall/Winter 2006, pp. 110‑113.