IFRS industry insights: Joint arrangements in the energy and resources industry
On the 12th May 2011, the International Accounting Standards Board (IASB) issued IFRS 11 Joint Arrangements which supersedes IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers.
Concurrent with the issuance of IFRS 11, the IASB also issued:
- IFRS 10 Consolidated Financial Statements
- IFRS 12 Disclosure of Interests in Other Entities
- IAS 27 Separate Financial Statements
- IAS 28 Investments in Associates and Joint Ventures
IFRS 11 and IFRS 12 may have some significant implications for the oil and gas industry relating to the classification, accounting and disclosure of joint arrangements. The most significant change will likely be the removal of the option to proportionately consolidate joint venture entities. The application of these new standards will require judgement, time, resources and consideration given the complexity of many of the joint arrangements.