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The conversion to IFRS will have a significant impact on Canadian oil and gas production companies. These companies have traditionally accounted for exploration and development costs using either the "full cost" or "successful efforts" accounting method. With the adoption of IFRS, oil and gas companies will be expected, for the most part, to abandon or significantly change their current accounting policies.
With these challenges in mind, the Canadian Association of Petroleum Producers (CAPP) and the Small Explorers and Producers Association of Canada (SEPAC) have produced a guidance document on IFRS conversion for the Canadian upstream petroleum industry. The latest draft of the guidance document was recently launched to the broader industry at a joint CAPP - SEPAC one-day symposium, held in Calgary. The symposium provided a high-level review of the contents of guidance document and covered the following topics:
The attendees of the symposium were made aware of the choices available to them as they prepare for and implement IFRS and provided them with, what the Sponsors of the document considered, "best practice". The guidance document is currently under going a "fatal flaw" review and should be available for broad dissemination by the end of January or early February.
Companies are reminded that they need to be actively engaged in preparation for IFRS as a priority and the priority is immediate as disclosure is required in the current year MD&A. Completion of a diagnostic assessment of the full impact of IFRS changes, including development of a comprehensive implementation plan, will be critical to a successful transition.
Please feel free to contact me for more information on MNP's IFRS services, the IFRS diagnostic or IFRS for the Oil and Gas industry.
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