A project team from the Australian Accounting Standards Board (AASB) is developing background material to assist the IASB in deciding whether to develop an IFRS for the extractive industries (mining and oil and gas). The AASB reviewed its work to date and asked the Board for instructions for the next steps of the project. The project team noted the wide range of accounting treatments currently used for pre- production costs, cost centres, allocations, impairment recognition, and disclosures. Even in those countries that have accounting standards for mining and oil and gas companies, none of those standards deals with the industry comprehensively.
The project team presented various approaches for addressing the issues. Among the questions is whether the existing scope exclusions in IAS 16 and IAS 38 should be retained, how other IAS/IFRS should be applied by companies in the extractive industries, and whether the IASB should develop implementation guidance.
After discussion, by vote of 9 to 5, the Board proposed that the project team come back to them before the end of this meeting with specific proposed amendments to IAS stating:
- These industries will remain scopeed out of IAS 16 and IAS 38.
- The definition of pre-production costs includes exploration and developments costs.
- Extractive industries should apply existing IAS/IFRS in accounting for pre-production costs and for identifying their cash generating units.