• Project carried over from IASC
• November 2000, IASC Issues Paper Published - click for Details
• Discussed at April 2005 IASB Meeting – Educational Session
• Discussed at July 2005 IASB Meeting – Educational Session
• Discussed at October 2006 IASB Meeting – Educational Session
• Discussed at June 2007 IASB Meeting
• Discussed at March 2008 IASB Meeting
• Discussed at June 2008 IASB Meeting
• Discussed at September 2008 IASB Meeting
• 10 August 2009 IASB posts working draft of discussion paper on its website. Click for More Information.

Timetable

• Click for IASB Project Timetable

Discussion at the April 2005 IASB Meeting – Educational Session

The Board had an introductory education session on mineral and oil and gas reserves and resources, focussing on the factors influencing the estimation of reserves and resources and the major reserve reporting codes and classification systems used in the extractive industries.

The first presentation on Resource / Reserve Reporting Standards for Minerals was done via video link from Melbourne by Pat Stephenson, Member and past Chairman of Joint Ore Reserves Committee (JORC).

The other presentation on Resource and Reserve Classification and Reporting Standards for Oil and Gas was done by Duncan Frost, Member of The Society of Petroleum Engineers (SPE) Oil and Gas Reserves Committee.

No decisions were made.

Discussion at the July 2005 IASB Meeting [Educational Session]

This education session involved a question and answer session with minerals and oil and gas industry experts focussing on reserve definitions. No decisions were made during this session.

The purpose of the July 2005 public education session for the extractive activities research project was to:

• expand Board members' understanding of:
  • the key elements of the existing reserve and resource definitions for minerals and oil and gas;
  • the similarities and differences between those definitions - and the two industries more generally; and
• provide Board members with a further opportunity to ask mineral and oil and gas technical experts questions about reserves and resources; and
• seek the Board's initial reaction to the possible directions for defining reserves and resources for financial reporting purposes.

Much of the discussion was centred on the different definitions of reserves and resources including that of the SEC. The Board indicated its intention to reach one generic definition for financial reporting purposes and to then take into account some of the differences in the current definitions, probability assessments etc into the measurement and disclosure provisions of the Standard.

Discussion at the October 2006 IASB Meeting

The Board held an education session on their extractive activities research project. Representatives from the research team presented the outcomes of the research on whether fair value is a suitable measurement and/or disclosure objective for extractive activities.

The representatives focused on agenda paper 4D (available from the IASB Website). The paper considered whether fair value as either the measurement or the disclosure objective for extractive activities would satisfy the qualitative characteristics to provide useful financial information. The research team reported that users had indicated more support for disclosure of inputs necessary for them to prepare their own valuations rather than the reporting of fair values. Based on a lack of support from users for fair value as the measurement objective, combined with difficulties in obtaining verifiable estimates of fair value and significant compliance costs incurred to estimate this value, the research team expressed concern with requiring fair value as a measurement objective.

The Board debated which difficulties the extractive industries may incur when measuring fair values of mineral reserves and resources, and how this would be different from other industries. The alternative to fair value would be to continue to measure mineral reserves and resources at historical cost. Board members generally said that they did not like the alternative, and they seemed confused about why users would be more interested in knowing how much is paid for a resource or reserve compared to what it is worth. The Board noted that it did not see the benefit of going forward with this project if it were to be based on historical cost as a measurement objective.

The Board asked the research team to go back and further explore which difficulties arise on fair value measurement of resources and reserves and bring this back in the future.

Discussion at the June 2007 IASB Meeting

The Board held two educational sessions on the extractive activities project. The first was a report from the project team; the second was an interactive session at which analysts who follow the extractive industries participated.

Project team report: convergence of definitions

The Project team provided a report Board on the progress of a review that is considering the potential for increased alignment between the minerals sector's definitions of reserves and resources and the petroleum sector's definitions of 'reserves' and 'resources'. The review is being undertaken by the SPE/CRIRSCO convergence team – which is an industry working group comprising members of the Society of Petroleum Engineers Oil and Gas Reserves Committee (SPE OGRC) and the Committee for Mineral Reserves International Reporting Standards (CRIRSCO). In an oral presentation, a representative of the SPE OGRC noted that what the two groups were trying to achieve was convergence of the assessment methodologies. How those methodologies were described might not be converged (for a variety of historical and operational reasons), but the definitions and descriptions used would be mapped to each other, so that confusion was minimised.

A Board member noted that this effort was critical to the IASB's research project. The reconciliation of the definitions of reserves and resources was a necessary step that was helpful to the Board as they explore whether it wants to use the resulting data as the basis for financial reporting.

Board members questioned and discussed various aspects of the definitions, especially those aspects of the definitions that might trigger accounting events. Several expressed appreciation for the efforts of the two sectors to reconcile the definitions and thought that they might be useful as the project team continues its work.

The Chairman thanked the CRIRSCO and SPE teams for their efforts and commended the progress that had already been made. They were very helpful to the IASB as they educated themselves in this area and it was evident from the interest expressed in other areas, such as the United Nations Framework Classification project, that the work effort had relevance beyond the work of the IASB.

User survey discussion

At the second educational session, the project team presented and discussed the findings of a user survey that they had conducted to develop a better understanding of the information needs of users involved in analysing minerals and petroleum entities. They were joined by four UK-based analysts from Cazenove, Fidelity Investments, and UBS.

The project team had conducted interviews with 34 analysts, including buy-side, sell-side, venture capital, lenders, and debt rating agencies. These analysts were based in a variety of jurisdictions. The core findings from the user survey were:

• the financial statements and note disclosures provide some information that is necessary for users to make an informed investment decision in relation to a minerals or oil & gas company – primarily information related to cash flow and current period expenditures – but the information provided in financial statements and note disclosures alone is not sufficient to meet the needs of analysts and much information is sourced elsewhere;
• there is very limited interest in placing a valuation of reserves and resources (at current value or fair value) on the balance sheet;
• there is limited interest in disclosing a valuation of reserves and resources (at current value or fair value);
• measuring reserve and resource assets on the balance sheet according to a historical cost measurement model (for example, successful efforts, full cost, area of interest) does not generate much useful information;
• analysts generally would prefer more, and/or improved, disclosure of key valuation inputs so that those inputs could be incorporated into their own valuation models; and
• directors' sign off was generally identified as the preferred assurance or responsibility process that could be applied to the reporting of reserve information.

Board members and the analyst guests discussed various aspects of the survey results. Much of the discussion focussed on the petroleum sector. It was noted some of the disclosures required under FAS 69 and related SEC requirements did provide useful information. These disclosures had seen marked improvements in recent years.

In addition, companies provide additional materials; however those materials although similar are not prepared on a consistent basis.

The analysts present expressed mixed views about the benefits of assigning a value to reserve and resources on the balance sheet. Concerns about subjectivity and assigning 'too much credibility' to a number fraught with estimation error underlay these views. A disaggregation of inputs would assist analysts to make comparisons across companies in the sector. Board members noted that such concerns could also be made about other items for which a number is currently reported on the balance sheet. Issues similar to those in the extractive industry arose in other areas of speculative development, for example pharmaceuticals.

Board members asked, if current measures were not thought useful, what could be done to make historical cost-based financial information more useful. Were there opportunities for the Board to require more useful information; information that would be helpful in assessing costs and future cash flows. In particular, would it be helpful to concentrate on the information currently provided in some jurisdictions for 'upstream' and 'junior' activities-such as those in the US for development stage entities-where information about certain costs that are expensed are still captured in some way.

Analysts and Board members noted the potential cross-over between information in the financial statements and footnotes and information discussed in the management commentary. Much of the more subjective information reviewed by the Chief Operating Decision Maker was as important as that captured in the financial statements.

Without getting to industry-specific matters, there was still an opportunity to require discussion of the types of data related to income generation, operational performance, etc.

The project team asked the Board for their views on possible approaches to financial reporting for inclusion in the Discussion Paper. The staff proposed a current value model and a historical cost model with enhanced decision-useful disclosures.

A Board member noted that there were cross-cutting issues, especially the 'unit of account' issue, before any decision can be taken on what the financial reporting should be. After further discussion, the Board agreed that the Project team should continue to develop the two proposed models.

Discussion at the March 2008 IASB Meeting

Definitions of reserves and resources

The IASB were joined by members of the IASB's Extractive Activities Research Team and by staff from the Office of the Chief Accountant, US Securities and Exchange Commission (SEC).

The session was an opportunity for the Board to hear about developments occurring in the United States of America in relation to oil and gas reserve definitions and disclosure requirements. In particular, the SEC staff outlined the content of the recent Concept Release on Possible Revisions to the Disclosure Requirements Relating to Oil and Gas Reserves (PDF 380k). The Concept Release was issued to gauge the interest in a revision of the current requirements for oil and gas reserve disclosures, which date from between 1978 and 1982. In particular, the SEC was aware of concern that their rules had not adapted to current practices and might not provide investors with the most useful picture of oil and gas reserves. This issue is relevant to the IASB's research project on extractive activities, because a central issue in the IASB's project is the definition of reserves and resources. The session shared information, and no decisions were made.

Subject to the usual SEC disclaimers, the staff noted that their preliminary analysis of the comments they have received fell broadly into three groups:

• those who thought that the current requirements gave a degree of standardisation that was desirable and need not be changed dramatically;
• those who favoured more radical change, perhaps adopting the approach to reserve evaluation developed by the Society of Petroleum Engineers, in particular the SPE's Petroleum Resource Management System (PRMS); and
• those who wanted something somewhere in between.

Contentious areas included the classification and disclosure of reserves; whether disclosure of reserves other than 'proved reserves' should be permitted; pricing; and issues related to 'unconventional' reserves (for example. tar sands and oil shale).

The SEC staff noted that the comment letter analysis was still under way and that the Commission had not yet determined whether any rulemaking is necessary.

A Board member asked the SEC staff what was meant by the Concept Release's Question 1, which asked whether the SEC should develop a 'principles-based rule'? The staff responded that the Commission were trying to find a way to ask registrants 'to do the right thing in good faith'. The Board member was relieved that the SEC "had no more idea of what 'principles-based' meant" than he did.

Another Board member asked whether the SEC had given thought to whether any rules it might issue, especially with respect to unconventional mineral resources and means of extraction, would become the standard for mining companies also, or whether mining entities would continue to have more latitude with respect to reserve disclosure. The SEC staff acknowledged the issue but had no ready answer (nor, the Board member noted, does the IASB).

With respect to pricing reserves, the same Board member noted that the current SEC rules require a trailing twelve-month average, whereas oil is priced on a forward basis. He was concerned that the SEC might continue to insist on historical information, while most market participants were interested in forward-looking information. Again, the SEC staff acknowledged the trade-off between the consistency that historical information would give and the decision-usefulness for forecasting future cash flows that forward-looking pricing would provide. This would be an issue for the Commission to decide.

The coordinator of the Research Team noted that of the 80 letters received by the SEC, 12 had been submitted by entities represented on the IASB's advisory panel and a further two had participated in the development of letters submitted by professional organisations.

Reserve and Resources Definitions and Asset Recognition

The Board was joined by members of the IASB's Extractive Activities Project Team, representatives of the Society of Petroleum Engineers' Oil and Gas Reserves Committee (SPE) and (by video link) the Committee for Mineral Resources International Reporting Standards (CRIRSCO).

The meeting discussed progress made by the SPE and CRIRSCO towards convergence of their respective definitions of reserves and resources and whether those definitions might be suitable for use in a future IFRS addressing 'upstream' mineral and hydrocarbon/ petroleum extractive activities. This review was undertaken at the IASB's invitation.

The SPE and CRIRSCO convergence team determined that there was 'a high degree of compatibility in the classification logic that petroleum and minerals evaluators apply in determining quantities of their respective materials that reside in a field or deposit and can be extracted and marketed'. However, 'full convergence' was not justified.

The alignment was illustrated by the following diagram:

Petroleum and minerals both use 'proved and probable' reserves and resources to mean reserves that are 'more likely than not' (to use the IASB term). The petroleum sector uses 'possible' resources to describe what the minerals sector call 'inferred' resources, although for practical reasons the mineral sector does not assign a high degree of confidence to such resources.

The Board discussed issues surrounding the definitions proposed by the SPE/CRIRSCO and posed questions to the representatives present. It was noted that, although the definitions were relatively fixed, the guidance to apply the definitions was more easily changed. In particular, the ongoing work of the US Securities and Exchange Commission with respect to disclosures by oil and gas entities (see IASPlus.com for 12 March 2008) might have an effect on the model as it is today. In particular, the CRIRSCO representative noted that mineral exploration entities commenting to the SEC's Concept Release urged that minerals and oil and gas should have a common disclosure regime.

It was noted that the mineral and petroleum sectors view proved and probable reserves slightly differently for financial reporting purposes (primarily because of the SEC rules), but operationally they are a continuum that is constantly reassessed under their respective business models.

This part of the session was informational and no decisions were made. However, the IASB Chairman thanked the SPE and CRIRSCO for rising to the challenge posed to them by the IASB and for the significant contribution their report had made to the IASB's research project.

The Board approved a staff recommendation that the forthcoming IASB research discussion paper be drafted on the basis that the best prospects for defining minerals and oil and gas reserves and resources, at this stage, appears to be with using the CRIRSCO and SPE definition systems. This would enable the IASB to propose, where appropriate, comparable accounting and disclosure requirements across the minerals and oil and gas industries. In addition, the progress of the SEC and UN Framework Classification for Fossil Energy and Mineral Resources (UNFC) processes be monitored to confirm whether those systems might offer viable alternatives for defining reserves and resources in an IFRS.

Applying the Asset Definition and Recognition Criteroa

The Board discussed alternatives identified as to what might constitute control of a mineral resource by the research project team.

View A

View A is that control is the absolute right to extract the mineral or oil and gas from the ground. This view implies that all the rights (including permits, licences and approvals) necessary for development and production must be in place, including governmental and environmental approvals, agreements with landowners and others with rights.

View B

View B places more emphasis on the unconditional ability to apply for any additional rights, denying other entities access to the future economic benefits. Under View B, control over minerals or oil and gas reserves and resources exists where the entity holds some present legal rights (for example, the unconditional right to explore according to the terms of an exploration permit) and the right to apply for the outstanding rights that are a prerequisite to having the absolute right to extract the mineral or oil and gas (for example, the conditional rights to develop and produce the minerals or oil and gas located on the property). By definition the entity controls the unconditional rights. Development may be conditional on several factors, including determination that there is a resource that is suitable for development (size, structure, mineralisation etc) and the obtaining of the necessary permits etc.

The Project Team favour View B, which they see as more aligned with how such projects are managed in practice. Some Board members were sympathetic but disagreed with the conclusion, particularly because they saw problems with the unit of account (the right to exploit the mineral vs the right to apply to exploit the mineral). Board members wanted to know the unit of account before agreeing to the Project Team's recommendation. The Project Team will return later with a revised recommendation.

Discussion at the June 2008 IASB Meeting

The Extractive Activities project team discussed progress made towards producing a Discussion Paper on key features of an accounting model for certain aspects of minerals and oil and gas reserves and resources. This discussion focused on asset definition, recognition and unit of account issues.

Asset definition

The project team noted that their proposed approach was to focus on the definition of an asset in the current IASB Framework (and, to a lesser extent, current activities on the revised asset definition as a result of the Framework project), rather than on the traditional approach to asset recognition in this sector, phases of an extractive project.

The project ream had identified two types of asset and items that might be within those broad categories:

Intangible assets: including legal instruments/approvals necessary for undertaking 'upstream' extractive activities (for example, mineral rights, development permits, etc); and information (such as geological data confirming or not the presence of mineral resources in a particular area).

Tangible assets: including mineral, oil and gas deposits and property, plant and equipment used to access and extract those resources.

The Board expressed broad agreement with the approach. However, there was a great deal of detailed discussion about 'information' intangibles and the proposed 'flip' from intangible (the right to exploit) to tangible (the resources themselves).

Board members noted that information by itself was unlikely to be an asset-it could only enhance the value of an asset.

Others disagreed, noting that information (e.g. the results of geological surveys) could be sold. In response, Board members noted that information may be an asset, but without the right to exploit it, it was probably not worth very much. There appeared to be agreement that in this context legal rights were precedential.

The project team presented two views of when reserves and resources would meet the definition of an asset. One view would require all the rights (including permits, licences, and approvals) necessary for development and production be in place before a mineral resource could be recognised on the balance sheet. The project team noted that this took a narrow view of control of the asset. The alternative view would require the entity to have the legal rights to the minerals sufficient to allow then to extract those resources and to deny access to them by others; to have received approvals that give the entity a reasonable expectation that it will be able to exercise those rights; and has an unrestricted right to apply for any outstanding rights or approvals that are ancillary in nature and expected to be received in a timely manner. This second view is seen as consistent with 'rational economic behaviour of entities and financial statement users' and presumably reflects significant elements of current practice.

The Board seemed to accept that both views were possible at this stage, although some did seem concerned about the cliff effects of the proposed recognition.

The discussion moved on to when an asset should be recognised. Again, two views were presented: one a narrow view based on an assessment of whether the exploration and evaluation activities have been 'successful'. The alternative position views economic benefits more broadly to include the potential benefit to the entity if it were to sell the property. However, one Board member suggested that recognising and measuring the reserves and resources as a separate (tangible) asset was not necessary. In his view, the one thing that remains constant is the right to exploit. Once minerals have been discovered, the right becomes more valuable. The communication to users might be clearer if it were the mineral rights that were re-measured rather than the resources. This interesting point was not explored further, but may be developed by the staff. The Board then discussed unit of account issues. The Board seemed to have general agreement with the project team's conclusions:

• (a) infrastructure assets that generate largely independent cashflows are excluded from the unit of account - in other words, the unit of account can be no greater than a cash-generating unit, as determined in accordance with IAS 36;
• (b) infrastructure assets that are physically and commercially separable are excluded from the unit of account - in other words, this applies to assets which could realistically be moved to other operations and the movement of these assets could be economically justified. In contrast, assets that are commercially inseparable include assets that, although being physically separable, may be more economic to abandon or decommission than to physically move them to a new location. Examples might include assets that are dedicated to the property because either:
  • (i) they are not readily movable (e.g. offices, concentrator, dedicated rail facilities etc); and/or
  • (ii) are specialised so there is no other economic use for the assets; and
• (c) infrastructure assets that have different useful lives from the reserves are excluded from the unit of account.

August 2008: IFRS and the mining industry

Publicly accountable entities in Canada are required to switch to IFRSs starting in 2011 (with an option to adopt IFRSs earlier, even in 2008, with approval of the Provincial securities regulator). The transition from Canadian GAAP will be different for every company. However, particular industries will experience common themes and issues. Deloitte (Canada) has published IFRS and the Mining Industry: Top Ten Accounting Issues for Canadian Issuers (PDF 264k). This publication provides Deloitte's viewpoints on the following IFRS changeover issues in the mining industry:

Discussion at the September 2008 IASB Meeting

The purpose of this session was to seek the Board's input on:

• Disclosures for minerals or oil & gas activities; and
• Drafting of the Discussion Paper

The first part was structured as follows:

• Disclosure objective(s) for extractive activities;
• Guiding principles for financial statement note disclosures; and
• Types of disclosure that would satisfy these objectives.

Disclosure objective(s) for extractive activities

The staff presented its proposed disclosure objective for extractive industries:

• Future cash flow prospects from the minerals or oil & gas assets;
• Current period financial performance of the entity; and
• Nature and extent of risks and uncertainties associated with such assets.

It was noted that these objectives are similar to the disclosure objective of IFRS 7 Financial Instruments: Disclosures.

Some Board member noted that although financial performance was identified as one objective, much of the disclosure the staff proposals would require is cash flow information (not on an accrual basis) or is a volume measure. The staff agreed to refine the objectives.

Guiding principles for financial statement note disclosures

The staff noted that the same types of information should be provided across the mining and oil & gas industries, but this is not meant to imply they would have to be identical. Instead they should be directionally consistent and comparable within each industry.

The staff informed the Board that it does not intend to make a split between disclosures within the financial statement and management commentary (which is currently not part of IFRS financial statements) and would await feedback from constituents on this point.

Types of disclosure that would satisfy these objectives

Categories of reserves and resources to be disclosed

The staff presented the volume information they considered as useful. It was proposed to require entities to report, at a minimum, the best estimate of the economically recoverable resources. One Board member asked what was meant by 'economically recoverable'. The staff responded that this was aimed at the probability given a price as many entities would manage on a 'proven + probable' basis and that this was indicated the most appropriate information to be provided.

Another Board member asked what was meant by the best estimate and that the staff should consider using a different notion to avoid confusion with existing IFRS terms. It was also questioned whether sensitivity analyses would be required on the number disclosed. One Board member noted that changes in prices have an influence on the volume and that would be useful information.

There seemed to be agreement to the approach proposed by the staff.

Disaggregation of volumes

The staff proposed to require disclosure of volumes by commodity type and geographical location and that these volumes should be attributed to segments. It was noted that oil sands operations should be separately reported from other oil reserves as they are high cost activities. It was also highlighted that while geographical disaggregation in the oil industry would not be feasible on a property-by-property basis, this would be existing practice for minerals. The Board had a short discussion on how to treat production sharing arrangements.

It was also proposed that the mineral industry should be required to provide information on an property-by-property basis to ensure consistency and comparability within the industry.

Attribution of reserve volumes

The staff presented the proposed treatment of the attribution of reserves that are attributable to the shareholders of the parent entity. It proposed two approaches:

• Only the equity interest of the parent in the reserves; and/or
• Minority interests in the reserves.

The Board discussed whether the approach taken by the staff was in line with the entity concept taken in IFRSs, notably with regard to the treatment of minority as equity. The proposed approach would be unique, as usually disclosures are not separating between majority and minority shareholder.

It was also discussed whether time restrictions should be disclosed and how expected renewals should be treated.

Underlying assumptions for reserve estimates

The staff explained the disclosures for the key assumptions used in estimating the reserves. At a minimum, they proposed the commodity price to be disclosed. The basis for the commodity price assumption could be:

• A market participant view;
• Management's own expectation; or
• A historical average.

One of the Board members expressed his preference for a disclosure based on spot prices plus market participants' expectations.

The Board discussed the pros and cons of the approaches, but leaned towards a market participants' view.

Reconciliations of changes in volume from year-to-year

The staff informed the Board that it would propose a predominantly quantitative reconciliation of the changes in reserves to allow users better understanding the nature and extent of estimation uncertainties. The minimum items of such a reconciliation would be:

• Discoveries and extensions;
• Revisions of previous estimates;
• Production of minerals or oil & gas;
• Acquisition of reserves through the purchase of minerals or oil & gas properties; and
• Disposal of reserves through sale or disposal.

It was noted that there must be further breakdowns to enhance usefulness. The Board seemed to agree.

Value-based information

The staff noted that the previous disclosures would not provide an indication of the amount of future cash flows the reserves could generate. The disclosures would depend on the recognition and measurement of mineral and oil & gas assets. The staff outlined two approaches based depending on whether the assets are measured at cost or at fair value/current value basis.

It was proposed that a standardised current value measurement could be employed. The staff highlighted that this would not be an estimate of fair value; rather, the objective would be to reduce variability and cost of preparing the estimate.

Board members asked the staff to make clear in the Discussion Paper that disclosures would differ depending on the measurement attribute used for mineral and oil & gas assets.

Other types of value-based information

The staff proposed that the Discussion Paper should also include an alternative to a current value approach. In this approach users would be provided with information on the cost structure and the expected production. According to the staff this would enable users to prepare their own valuations. The Board seemed to agree.

Sensitivity analysis

The staff proposed to require sensitivity analyses to enable users estimating uncertainties surrounding volume estimates. The

Board seemed to agree.

Time series of exploration, development and operating costs incurred

It was proposed to require time series information for certain cost incurred. In response to a question by a Board member, it was explained that this was cash-based information. A possible time horizon could be five years.

The staff then gave a brief update on a meeting with the 'Publish what you pay'-initiative. It was highlighted that they requested amendments to the country-specific disclosures and extended cost information.

Drafting the Discussion Paper

The staff informed the Board that they plan to present staff views only and no preliminary view by the Board. It should be published as an IASB document. There should also be explanation why this research project had been undertaken and a list of questions. The staff talked the Board through the proposed structure of the paper and the view the staff would take on the topics. The Board seemed to agree with the approach taken.

The Chairman thanked the staff and highlighted the good work done by the staff.

August 2009: Extractive activities – draft discussion paper

In August 2009,l the IASB posted on its website a working draft of a discussion paper Extractive Activities. The draft was prepared by a project team comprising staff of the national accounting standard-setters in Australia, Canada, Norway, and South Africa. The paper addresses financial reporting issues associated with exploring for and finding minerals, oil, and natural gas deposits, developing those deposits, and extracting the minerals, oil, and natural gas. The paper notes that an absence of comprehensive IFRS literature on the subject has contributed to a divergence in practice under IFRSs. The paper reviews the issues and presents the recommendations of the project team. It is posted for information only – comments are not requested. The IASB plans to invite comments on the project team's proposals in the first quarter of 2010. The project is not yet on the IASB's active agenda. The IASB has agreed that if it adds the extractive activities project to its agenda, it will regard the discussion paper as the first stage in its due process. In that case, the IASB would publish an exposure draft as the next phase of such a project.

Here is a link to the Project Page on the IASB's Website where the draft can be downloaded.

September 2009: Analysis of extractive industries DP

Deloitte Australia's Energy and Resources Group has published Issue 6 of the Extracting Value Newsletter (PDF 204k), a special edition focussing exclusively on the draft Discussion Paper (DP) Extractive Activities, recently released 'for information purposes' by the IASB. Whilst ostensibly proposing approaches producing outcomes similar to common industry practice, there are a number of interesting issues and considerations arising from the draft Discussion Paper – such as potentially mandating capitalisation of exploration expenditure and much more information about the fair value of reserves and resources. This edition of Extracting Value explores some of these issues, beginning the commercial and pragmatic analysis of the proposals. An excerpt: In summary terms, the Discussion Paper proposes to: introduce mineral reserve and resource definitions based on industry practice eliminate 'phase accounting' – separate accounting for exploration and evaluation, development, production and so on – in favour of one asset, either a 'mineral asset' or 'oil and gas asset' eccount for mining and oil and gas projects using a 'unit of account' which is effectively the 'area of interest' accounting commonly used in Australia under current standards require measurement based on historical cost, but countenancing the possibility of using another measure such as current value or (more likely) fair value retain a modified impairment approach to assets in the exploration and evaluation stage introduce extensive disclosures, including a form of 'standardised value' for reserves/resources and possibly responding to the 'publish what you pay' lobby.