AcSB updates research on extractive industries
11 Feb 2019
In 2018, the IASB started gathering evidence to help it decide whether to start a project to develop proposals to replace IFRS 6 'Exploration for and Evaluation of Mineral Resources'. Before deciding the scope and direction of a research project, the IASB asked the national standard-setters who contributed to the 2010 discussion paper on extractive activities to make the IASB aware of any new developments.
The Canadian Accounting Standards Board (AcSB) staff has now prepared a research update to identify accounting challenges faced and any developments since 2010 in the extractive sector as well as how those changes affect the research findings in the discussion paper.
Key research findings include:
- A weak commodity price environment and pipeline capacity constraints are placing additional pressures on the extractive sector.
- The decline in commodity prices reduces the profitability prospects and attractiveness of the sector.
- These pressures have caused a decrease in the number of publicly traded entities as a result of mergers, acquisitions and bankruptcies.
- Other than that, there have been no significant changes or developments in the Canadian extractive sector since 2010.
- Many preparers, practitioners and regulators say that there are areas of accounting complexity both within and outside of the scope of IFRS 6.
- However, non-authoritative guidance on many of these challenges are available, e.g. by CPA Canada Mining and the CPA Canada Oil and Gas Task Forces.
Please click to read the AcSB press release offering access to a short In Brief overview of the research update.
