OF A PROPOSED APB OPINION
ON THE EXTRACTIVE INDUSTRIES
by James F. Dunn, Jr. Partner, Houston Office
Presented before the Petroleum Accountants Society, Tulsa, Oklahoma-February 1972
At the time that this evening's program was scheduled, it appeared that the latest information concerning the proposed Accounting Principles Board Opinion on "Accounting for the Extractive Industries" would have been developed from the November 22-23, 1971 open meeting of the committee of the Board that was working on that draft opinion. Accordingly, I prepared a resume of my impressions of that meeting shortly after the meeting itself and I relaxed. Then, just eight days ago, on February 16, 1972 there appeared on the back page of The Wall Street Journal an article titled "Accountants Striking Dry Well in Attempts to Significantly Change Oil-Company Rules." In addition to being written with a substantial amount of journalistic license, this article was inaccurate in part, and somewhat misleading in other parts. It compounded my problems in preparing for this meeting, for obviously it could not be ignored. Before its release, I had anticipated speaking in terms of the environment in which the Accounting Principles Board is attempting to prescribe and codify the accounting practices of the petroleum industry. But with this Wall Street journalism, I had to abandon that approach and, instead, tell you my views of the matters treated in the article.
A SEQUENCE OF EVENTS
In my talk, I shall refer to various meetings and papers which I would like to name in advance for the benefit of those of you who have not yet had the opportunity to identify the plays and the players.
1. First there was a draft prepared in August 1971 by the Accounting Principles Board Committee on Extractive Industries. This draft, which dealt only with the definition of the cost center for the petroleum industry, was released hurriedly in an effort to counteract the FPC which had, by that time, issued a proposed rulemaking that would prescribe full costing for natural gas companies as they are defined in the Natural Gas Act.