Question 5 - How Do Your Auditors Validate Your Are Not Overpaying Capital, Operating Expenses or Royalties?

This is the fifth question in the list of ten questions to ask your auditor if you are a Canadian based oil and gas company. The original post can be found here.

The questions is:

How do your auditors validate that you are not overpaying:

a. Capital?

b. Operating expenses?

c. Royalties?

On the flip side, you could also ask the same question on underpayment.

This is important since all of these can have a positive or negative impact on your overall expenses. Even though your auditors don't have to do a 100% check against all your capital and operating expenditures and your royalty payments, there is still a chance that any errors could have an impact on the financial viability of an oil and gas company. Costs in oil and gas companies can be extremely large and there is potential for error. If your auditor were to take a more through approach to looking at expenses, they might find ways to add to the bottom line.

These opinions are mine and may not reflect your view. If you would like to contact me, then please feel free to do so at info@argentis-group.com. Argentis Group assists oil and gas companies with operational audits to identify areas to reduce costs, increase revenues and increase the overall asset value of an oil and gas company.