Auditing & Advising

The rules for auditing of reserves of public companies are changing to increase their reliability, but sometimes a company just needs a second opinion for its own confidence in its decisions.  Our background and expertise can help a company prepare for an audit or help the auditor to perform it.

 
 
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Process Audit & Audit planning

For decades reservoir engineering consultants like myself have offered process audits to provide assurances that the internal systems, controls and methodologies of a company are not likely to distort the resulting answers.  

PCAOB has recently proposed rules which would expand the requirement of auditors to examine just this kind of thing, even when third-party engineers have been employed. Whether executing the audit or preparing for it, experienced knowledge of what to look for makes the process more efficient and more reliable. 

 
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Risk assessment

Reserves are reported deterministically, that is, as a single point value, though they involve a good deal of uncertainty.  Some parts of the analysis of recovery and of economics are more uncertain than others, depending of course upon the situation.  When those are not explicitly quantified, they can be recognized, reported and sometimes redressed.  

Understanding the types of uncertainties and their ranges, though, is the most expensive part of the learning process, and we can help you to put the analysis in context and to identify what risks remain for remediation. 

 
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substantive testing

Some engineering estimates are fluffy, and some are fragile.  Some are not as robust but perhaps still within the range of reasonable, while others stand like a house of cards, tall and prone to fall dramatically.  The strength of reserve estimates resides in its data, assumptions and methods. 

Analysis is built on data, and the structure is no better than the foundation. There are six accepted engineering methods for the analysis of reserves, all of which are subject to misuse.  And it is common for a single cash flow to contain 25 to 30 separate assumptions.  We can help you systematically to identify what matters, what doesn't, and what are the systematic correlations among topics

To provide audit services, we sometimes partner with experts in related disciplines.  Click below to learn more about experts who can help with auditing of environmental liabilities.