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.

——————————–

Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

Click to comment

TRENDING RIGHT NOW

To Top