Mandate for Maurel & Prom: Accounting treatment of risk hedging on oil prices
Background/Issues
Oil price is very volatile. The company is encouraged by its banks to put in place hedging financial instruments. However the low volumes hedged can not justify the implementation of a very sophisticated risks reporting sytem.
Nevertheless, IAS/IFRS constraints apply with the same level of requirements than for groups with higher volumes.
Scope and Target audience
Review of all hedging transactions in place
Audit of hedging’s processus
Validation of measurements realized by the banks
Work on three period-ends : one yearly and two half-yearly
Interventions modalities and learning tools
Auditing of entries’ schemes
Auditing of measurements used at three accounting period-ends to validate datas
Project management : communication, Internet web-site, information, …
Outcomes
Proposition of processus’s improvements
Securization of accounting treatment