The staff of the Securities and Exchange Commission has done some nip-and-tuck work to the accounting guidance around oil and gas activities, publishing authoritative guidance in Staff Accounting Bulletin No. 113.

SAB 113 revises or rescinds portions of earlier interpretive guidance and shores up consistency between staff guidance and SEC rules and regulations. The primary focus is on updates conform staff guidance with the contents of Financial Reporting Release No. 78, Modernization of Oil and Gas Reporting, published in December 2008 and Release No. 79, Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies, published in April.

Chuck Evans, a partner with Grant Thornton, said SAB 113 is basically a housekeeping measure to put sharper teeth into the provisions of Release No. 78 issued last year. Among the more significant changes with Release No. 78, companies are now required to use an averaging method to establish oil and gas reserve pricing for year-end reporting purposes rather than using a price quoted on a specific date, said Evans. The release also requires some companies to perform impairment testing based on average rather than point-in-time pricing as well, he said.

The American Institute of Certified Public Accountants recently published a working draft of an audit and accounting guide that would help companies with oil and gas producing activities and their auditors comply with U.S. accounting and auditing standards. The guide provides some history on the oil and gas industry, a summary of the primary business activities, the accounting for common ownership arrangements, methods of accounting that focus on successful efforts vs. full costs, international activities and tax considerations.

AICPA’s Accounting Standards Executive Committee approved the guidance contained in the 147-page draft and is accepting comments on it through Dec. 11.

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