UNIVERSITY OF ALBERTA SCHOOL OF BUSINESS
DEPARTMENT OF ACCOUNTING, OPERATIONS AND INFORMATION SYSTEMS
ACCOUNTING 463
ACCOUNTING FOR NATURAL RESOURCES, ENERGY AND THE ENVIRONMENT
SYLLABUS
WINTER 2012
Instructor:
Office:
e-mail:
Office Hours:
Class
Tom Schneider
BUS 3-30C Phone: 248-1317
B1: TTh 9.30 – 10.50 p.m. (BUS 1-6)
thomas@ualberta.ca
Tuesday 11.00 p.m.-1.00 p.m. or by appointment
COURSE DESCRIPTION AND OBJECTIVES
This course is an introduction to accounting for natural resources, energy and the environment.
It is designed to give students an understanding of the accounting standards and practice that
exist in the resource and energy sectors, with a significant emphasis on environmental matters.
The first part of the course will cover some of the key concepts required to understand how
environmental liabilities and related assets pass through the financial statements. A key focus
will be on the mechanics of accounting for environmental liabilities under International Financial
Reporting Standards and U.S. GAAP. 1 The course will then cover a number of emerging issues
in accounting for extractive activities, which will include the ‘Extractive Activities’ and
‘Emissions Trading Schemes’ projects of the International Accounting Standards Board (IASB).
Time permitting; it will also touch on the increasingly important role of environmental disclosure
and audit. At the conclusion of the course, students should be familiar with accounting for
environmental liabilities and related assets, emerging issues in this area and understand some of
the most common ways in which firms go about creating environmental reports and audits for
internal and external reporting (required and voluntary).
EVALUATION
Your grade in this course will be based on the marks you obtain on one midterm exam, a group
project (including an in-class presentation), in-class participation and a final exam. These marks
will be weighted as follows to determine your percentage mark in the course:
Midterm Exam
(Thursday, March 1)
30 %
Participation
Ongoing
10 %
Group Project
(Hand in and in-class presentation)
20 %
Final exam
(Friday, April 20)
40 %
Total
100 %
Note: Marks for the midterm and final will be switched if the midterm
mark is higher than the final.
1
Canadian public companies must report under International Financial Reporting Standards (IFRS) for fiscal yearends after December 31st, 2010.
Exams
There will be a closed book mid-term to ensure students have an understanding of the accounting
methodologies covered over the first part of the course. It will take place on Thursday, March 1st
during the scheduled class time. There will also be a closed book final exam. You will be given
in advance a series of long-form questions addressing accounting topics and issues covered in the
class.
•
•
Midterm – Thursday March 1, in class
Final Exam – Friday April 20, 9.00 a.m., Location TBD
Anyone who has an unavoidable commitment that conflicts with the midterm exam should advise
me of the conflict, in writing, at least one week prior to the exam date.
Absence from Exams
If you are absent from the midterm exam for a legitimate and adequately documented reason,
you will be required to write a deferred exam as soon as possible after the date of the midterm.
Participation
The participation mark will be based on demonstrating in class that you are keeping up with the
assigned readings, engaging actively in discussions and asking relevant questions of the invited
speakers.
Group Project
For this project, you will work together in groups of three to four. The project will consist of
selecting a particular topic of interest as it relates to the course. I will give you a series of
suggestions; however, original ideas are welcome. The group must write a report to be handed in
on April 3rd. Commencing April 3rd, group presentations will be begin. Presentations will
follow in each subsequent class until all groups have presented. All students are expected to
provide a relatively equal input towards the group project. Group evaluation forms will be
utilised to ensure that students provide adequate out-of-class input towards their respective group
projects. Less than satisfactory group evaluations will be reflected in your participation mark.
The final detailed instructions will be presented in class and posted on Blackboard on March 1st.
Note on Course
The topics and timing as noted in the class schedule below will be subject to change. In the event
that topics take longer to cover than expected, sections will be dropped as appropriate. In the
event that things go more quickly, a section on alternative accounting methods will be added to
the course.
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Accounting 463 Syllabus – Winter 2012
COURSE MATERIALS AND ACTIVITIES
Required Textbook
There is no required text book for this course. Required readings will be announced in the class
prior to the one in which they will be discussed. A running list of required readings will be
posted on Blackboard.
Blackboard
You will be able to obtain the following materials from Blackboard at https://ulearn.ualberta.ca/
• Lecture notes and related items (e.g., PowerPoint slides, Excel spreadsheets.)
• Required readings or instructions as to how to find them online.
• Instructions for the group project.
• Regular announcements.
Blackboard also provides a web forum (Discussion Board) for posting questions.
In-class Activities
Our classes will be a combination of regular lectures, guest lectures and student presentations. In
addition to attending the classes, it is expected that you will read the assigned materials before
coming to class.
ACADEMIC INTEGRITY
Absolute and complete academic honesty is expected of you in this course. It is important for
you as a student to behave in an ethical manner. The University of Alberta is committed to the
highest standards of academic integrity and honesty. Students are expected to be familiar with
these standards regarding academic honesty and to uphold the policies of the University in this
respect. Students are particularly urged to familiarize themselves with the provisions of the
Code of Student Behaviour (online at www.ualberta.ca/secretariat/appeals.htm) and avoid any
behaviour that could potentially result in suspicions of cheating, plagiarism, misrepresentation of
facts and/or participation in an offence. Academic dishonesty is a serious offence and can result
in suspension or expulsion from the University.
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Accounting 463 Syllabus – Winter 2012
TENTATIVE CLASS SCHEDULE – WEEKS 1 TO 3
Week
1
2
Topics
Jan 10
Jan 12
Jan 17
Jan 19
3
Jan 24
Jan 26
Introduction and overview of course
Liabilities: Provisions, Asset Retirement Obligations and Contingent liabilities
• Background
• How do these liabilities enter the financial statements? How do they flow through the financial statements?
• Required reading: Schneider 2010; Accounting for Environmental Liabilities under International Financial
Reporting Standards
Liabilities Continued
• Detailed study of change from Asset Retirement Obligations under old Canadian GAAP to Provisions under
IFRS; comparison of discount method, recognition criteria, etc.
• Required reading: selections from various annual reports as posted on Blackboard
Liabilities Continued
• Case studies on oil sands operations (impact of change to IFRS and proposed changes to IAS 37)
• Implications of deferred tax assets arising from AROs and Provisions
Asset recognition
• Exploration, evaluation and stripping costs
• Full cost versus successful efforts
• Definition of unit of account (geographic area)
• No Class – to be made up as Lecture One by guest speaker David Elliott, Chief Geologist Alberta Securities
Commission, on Monday March 5th at 5.00 p.m.
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Accounting 463 Syllabus – Winter 2012
TENTATIVE CLASS SCHEDULE – WEEKS 4 TO 7
Date
4
Jan 31
Feb 2
5
Feb 7
Feb 9
6
Feb 14
7
Feb 16
Feb 28
Mar 1
Topics
The fiscal regime in Alberta
• Royalties and taxes on oil and gas activities in Alberta
• Required reading: Dixon et al. 2011
Fiscal regimes in other jurisdictions
• An overview of selected royalty and tax regimes in jurisdictions outside of the province of Alberta
Financial Security for de-commissioning liabilities – Part One
• Alberta’s Mine Financial Security Program
Financial Security for de-commissioning liabilities – Part Two
• Qualified Environmental Trusts
• Financial security in the international context
Impairment
• U.S. versus IFRS
Revenue recognition and inventory valuation
• Gold industry example
• LIFO versus FIFO
Farmins/Farmouts
• What are they and how are they accounted for?
No Class: Have a great reading week!
Introduction to reserve valuation
Catch-up or review for mid-term, as needed.
Mid-Term Exam
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Accounting 463 Syllabus – Winter 2012
TENTATIVE CLASS SCHEDULE – WEEKS 8 TO 10
Week
8
Dates
Mar 5
5.00 p.m.
Location
TBD
Mar 6
Mar 8
9
Mar 13
Mar 15
10
Mar 20
Mar 22
Topics
Extra Class tentatively scheduled for 5.00 p.m. Location TBD.
Guest Speaker: David Elliott
• Chief Geologist Alberta Securities Commission
Lecture One:
• Standards of disclosure for oil and gas activities
o NI 51-101 in Canada for OSC registered firms
o Discussion of requirements for SEC registered firms
Guest Speaker: David Elliott
• Chief Geologist Alberta Securities Commission
Lecture Two:
• Oil and gas evaluation and classification
• COGEH, PRMS, and the United Nations Framework Classification (UNFC)
Changes to environmental accounting standards
• Proposed changes to IAS 37 and to ASC 410
Guest Speaker: Mark Walsh
• Principal, AcSB
• Committee Member, IASB Extractive Activities Project
Government relations
• Political and operating risk
• Joint operations
Emission Trading Schemes
• Valuing as asset
• Valuing liability
• Overview of existing schemes
Assurance
• Environmental and Sustainability reports
• GRI
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Accounting 463 Syllabus – Winter 2012
TENTATIVE CLASS SCHEDULE – WEEKS 11 TO 14
Week
11
Dates
Mar 27
Topics
12
Apr 3
13
Apr 5
Apr 10
Assurance
• Third party verification – who is doing it and how are they doing it?
Voluntary environmental reporting
• Is it possible to tell good from bad performers?
• Review specific reports and try to determine if they are credible or not.
Environmental laws and regulations in the U.S.
• How they have affected changes in the reporting of environmental liabilities
• Potential Cooperation between the Environmental Protection Agency and the SEC
Group projects due
Group presentations
Group presentations
Group presentations
April 12
Review and exam prep, hand out final exam.
Apr 20
Final exam
Mar 29
14
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Accounting 463 Syllabus – Winter 2012