Reserves in Accounting

The accounting profession in Australia and overseas has taken up the responsibility of setting standards specifically relating to the minerals and energy industries. Australia led the way with AAS7 Accounting for the Extractive Industries. This statement was issued in 1976 and amended 1977..It largely deals with accounting for preproduction expenditure and uses the term "economically recoverable reserves". It does not require disclosure of reserve quantities or values in balance sheets or as supplementary information in financial statements. The United States accounting profession in 1982 finally resolved an accounting standard in the same area as AAS7-SFAS69 Disclosures About Oil and Gas Producing Activities. It applies only to oil and gas producers, but has extensive disclosure requirements, including proved oil and gas reserve quantities. Current developments indicate that Great Britain is about to follow the US example. At this time in Australia, AAS7 or some other statement relating to the extractive industries has not been issued as an approved accounting standard by the ASRB. Standards issued by the ASRB are binding in law.