Regulation

Ambiguous Accounting Rules Hinder Exxon Investigation

Investigation Into Exxon Accounting

The probe into Exxon’s accounting practices may be facing an uphill battle.

Reuters reported on Monday (Sept. 19) that New York Attorney General Eric Schneiderman may have some difficulty in building a case against Exxon for allegedly not taking writedowns during the oil price slump.

Accounting experts noted that energy companies have long had significant leeway when it comes to reporting under U.S. accounting rules. A person familiar with the matter told Reuters that Schneiderman is investigating why Exxon failed to write down assets even while oil prices fell.

Many integrated oil producers have been forced to write down the value of their assets since the price of oil has dropped more than 60 percent over the last two years. But Exxon remains the only major producer that has held off on reporting the value of its wells, leases and equipment, which could lead to a false representation of the company’s financial health.

But some experts stated that Exxon’s lack of writedowns doesn’t signal any wrongdoing has taken place.

“This is an extremely subjective area,” Tom Selling, author of The Accounting Onion blog, told Reuters. “Everyone will have a different pattern of writedowns depending on how old their fields are and how much they cost to develop.”

Energy companies are provided with a range of methods to use under the U.S. accounting rules for valuing and impairing their assets. The process a company uses for writedowns may vary depending on the method used.

According to Reuters, an Exxon spokesman said its accounting practices and reporting standards follow the rules set out by the U.S. Securities and Exchange Commission and the Financial Accounting Standards Board.

——————————

PYMNTS LIVE ROUNDTABLE: TUESDAY, JULY 14, 2020 AT 12:00 PM (ET)

Digital transformation has been forcefully accelerated, but how does that agility translate into the fight against COVID-era attacks and sophisticated identity threats? As millions embrace online everything, preserving digital trust now falls mostly on banks and FIs. Now, advances in identity data and using different weights on the payment mix afford new opportunities to arm organizations and their customers against cyberthreats. From the latest in machine learning for fraud and risk, to corporate treasury teams working in new ways with new datasets, learn from experts how digital identity, together with advances like real-time payments, combine to engender trust and enrich relationships.

Click to comment

TRENDING RIGHT NOW