Thanks to my co-presenter, Dwayne Purvis, P.E., for his collaboration on our presentation to the SPEE of Oklahoma City. New, proposed PCAOB auditing requirements could significantly change how financial auditors see the work of management’s specialists (both employed, and third-party) and to what level they test significant management estimates including petroleum reservoir volumes and valuations and environmental liability and Asset Retirement Obligation valuations, among others. This presentation focused on the focus of the PCAOB to consider the work of a third-party specialist, engaged by management, to be as if it was management’s own work. However, other changes are briefly referenced, including the change in the auditing requirement to direct financial auditors to assess the reasonableness of significant methods and assumptions (versus just “understanding”) them. This may have many consequences including increasing effort (and costs) on both the parts of the financial auditor and management.
For potential impacts to the valuation of petroleum reservoirs, feel free to reach out to Dwayne through the contact information on his website (http://www.dpurvispe.com/) and for more information on what this could mean for environmental liabilities and asset retirement obligations (including well decommissioning), please feel free to contact us here.
Let us know if you have any questions about this presentation!