Faculty Scholarship 1994 - Present
Implications of International Financial Reporting Standard No. 6 for the Extractive Industry Companies in the United States.
In 2002 the Financial Accounting Standards Board (FASB), the primary U.S. standard-setting body and the International Accounting Standards Board (IASB) agreed to start working together to minimize the differences in their respective standards in what is now known as the Norwalk Agreement. In keeping with this agreement the recent standards issued by both organizations have attempted to anticipate changes in the reporting environments in each other�s domain and work towards a more harmonized financial reporting state in the world. A recent example of this is the issuance by the FASB of Statement of Financial Accounting Standards (SFAS) No. 153, which amended the method of accounting for fixed asset exchanges in U.S. to make it similar to the one used by the IASB. Until recently the IASB did not have a comprehensive reporting standard for the Extractive Industry segment, even though it noted in an Issues Paper Extractive Industries in 2000 that there was a lot of diversity in national reporting requirements across the world and that there should be an internationally acceptable approach to accounting in this industry. Recently the IASB issued International Financial Reporting Standard (IFRS) No. 6, entitled �Exploration for and Evaluation of Mineral Resources,� as an interim standard prior to the more comprehensive review of the accounting practices used by different countries, and hence a more detailed standard in the future. The purpose of this paper is to examine the requirements of IFRS No. 6 and speculate on the changes the standard may have on U.S. generally accepted principles (GAAP) and the impact this would have on the reported financial position of U.S. companies in the extractive industry.