Review of Accounting Practices in the Oil and Gas Industry

The role of GAO in providing Congress with critical analyses of government options, policies, and proposals to assist Congress in considering new legislation is reviewed. The Energy Policy and Conservation Act conferred upon GAO a large responsibility and affected GAO's oversight work at the Federal Energy Administration (FEA). The Federal Energy Administration Act required GAO to monitor and evaluate FEA. GAO was called upon to help the Securities and Exchange Commission to develop accounting practices for crude oil and natural gas producers. The Commission is authorized to rely upon standards developed by the Financial Accounting Standards Board. GAO's role is to insure that the accounting practices in the oil and gas industry will permit a reliable energy database to be compiled for public purposes. In addition, GAO has underway about 90 studies concerning energy supplies and conservation. GAO has been asked to assess the consequences that would result from natural gas curtailments and the impacts that would result if the price of interstate natural gas were deregulated. The possibility of deregulation must be carefully weighed against other alternatives. Although GAO supports the extension of FEA as a temporary agency, GAO supports the establishment of a Department of Energy and Natural Resources.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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