Wed, Apr 14, 2010
Plans by the ASX to overhaul reporting guidelines for oil and gas companies has been welcomed by national accounting firm RSM Bird Cameron
According to RSM Bird Cameron’s Director of Assurance and Advisory David Wall, an overhaul of reporting requirements for oil and gas companies will give shareholders much needed protection.
‘The ASX disclosure requirements for oil or gas companies are not as heavily governed. The disclosure requirements for these companies are set out in the Listing Rules, which stipulate certain requirements, but do not provide a lot of guidance on the standards to be used when preparing disclosure reports or the consequences for poor quality or erroneous disclosures,’ said Mr Wall.
ASX Listing Rules require certain disclosures from listing companies. Those disclosure requirements can be either continuous disclosure or periodic disclosure. There are specific disclosure requirements for “mining entities” – companies involved in exploration or extraction of mineral, oil or gas. The ASX disclosure requirements for mining entities are governed by Chapter 5 of the ASX Listing Rules, which have differing disclosure requirements for companies involved in minerals to those involved in oil or gas.
The disclosure requirements for mineral companies are set out in Appendix 5A of the Listing Rules. The appendix is the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code). The JORC Code has been developed by the Australian Institute of Mining and Metallurgy and has the full weight of that body and the Australian Institute of Geoscientists behind it to regulate compliance by its members. The JORC Code requires a competent person with certain qualifications and experience to prepare the disclosure and also sets out guidelines on the criteria to be considered when preparing the reports. Failure to comply with the JORC Code can have serious consequences for both the company and the competent person.
Mr Wall says there is a need for a similar type of code for oil or gas companies, which would provide criteria to be considered when disclosure reports are prepared and a system to deal with breaches of the standards contained in the proposed code.
About RSM Bird Cameron
RSM Bird Cameron is the largest mid-tier accounting firm in Australia serving the middle market with technical and commercial expertise over the full range of specialist corporate and business advisory services including assurance and advisory, corporate finance, taxation consulting and turnaround and insolvency.