The Oil Industry Accounting Committee (OIAC) was established in July 1984 following a review by the Accounting Standards Committee (ASC), which recommended a framework of Statements of Recommended Practice (SORPs) as a complementary series of statements to accounting standards. SORPs would relate to particular industries and be developed by accounting bodies drawn from the industries concerned.
OIAC was formed out of the nucleus of a sub-committee of the ASC which had existed to consider issues relating to oil industry accounting. The objectives of OIAC at its formation were to advance and promote agreement on accounting within the oil and gas industry, in particular to develop SORPs for the oil and gas industry in accordance with guidelines laid down by the ASC.
OIAC issued four Statements of Recommended Practice on individual topics over the period 1986 to 1991. In 2000, these were consolidated into a single SORP for upstream oil and gas activities, entitled ‘Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities’, which was updated in 2001.
Following proposed changes to UK Accounting Standards published by the Accounting Standards Board (“ASB”) as a consultation paper in August 2009 (and which ultimately led to FRS 100-102) OIAC re-examined all sections of the 2001 SORP ‘Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities’ in the light of the subsequent changes to accounting standards. As much of the SORP had been superseded, OIAC concluded that the main function of the SORP – setting out best practice in relation to industry activities that were not covered directly by the main body of UK accounting standards – is no longer applicable.
OIAC advised the ASB on its views of the current status of the SORP and its reluctance to update it. The ASB incorporated OIAC’s views into the final statements and therefore OIAC has effectively stood down as a SORP-setting body.