In spite of coming under increasing criticism over the past few years, the oil and gas industry has continued to grow not only in size plus power but also in influence upon its related industries. For example , the particular shear impact of the oil and gas industry and their specific requirements has resulted in the demand for a totally new set of criteria for accountancy solutions. This can partly be attributed to the heavy investment into areas for example research and development by the industry which can be difficult to track. The general success or failure of a project in these areas can modify how it is reported in order to make sure that the involved expenses can be appropriately capitalised upon.
With this in mind, the gas and oil industry use 2 key types of accountancy reporting. There is always an accountancy issue when it comes to the various methods of accountancy and financial reporting.
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These are generally known as “successful efforts” (SE) and “full cost” (FC). For successful energy reporting methods costs are capitalised for successful efforts where as not successful efforts (also known as dry opening projects) and their resulting linked operating costs are charged against the revenues for that period. In contrast to the particular successful efforts reporting method where projects are reported separately based on how positive an outcome they have the full cost reporting method groups all expenses relating to new projects.
Depending on how these expenses are usually reported will impact upon how a company reports their cash flow and net income. However in an attempt to develop a far more cohesive procedure for financial reporting inside the oil and gas industry FASB recently stated in the Standard of Financial Construction Standard that all oil and gas companies are required to use the SE reporting method. However with all these variations in financial reporting as well as the associated impacts which it can have got if done incorrectly has led to universities recognising this gap within accountancy skills. By doing this many educational institutions and professional institutes and body have developed offshore oil and gas industry economic reporting and accountancy qualifications in order to reflect the variations in process and requirements. For example Robort Gordons, which is based in Aberdeen the Western hub for the oil and gas industry, today offers oil and gas industry focused levels such as a Masters in Oil and Gas Sales. These qualifications aim to combine universal and industry specific modules to reply to the increasing demand for multidisaplined accountants for the industry. By motivating the development of employees with a combined academic and industry experiential knowledge it is clear that no matter what specialism a person work in there will always be that requirement for a multidisciplinary approach.