IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2023-06-4.html
   My bibliography  Save this article

Exploring the Accounting Treatment of Exploration and Evaluation Activities in the Extraction Industry in South Africa and Australia

Author

Listed:
  • Christa Van der Walt

    (School of Accounting Sciences, North-West University, Potchefstroom, Republic of South Africa.)

  • Banele Dlamini

    (School of Accounting Sciences, North-West University, Potchefstroom, Republic of South Africa)

  • Danie P Schutte

    (School of Accounting Sciences, North-West University, Potchefstroom, Republic of South Africa)

Abstract

The study examines the accounting treatment of exploration and evaluation assets in the extraction industry in South Africa and Australia. This study adopted a qualitative research approach and purposive sampling techniques. Data was collected from 60 entities in the extraction industry that are listed on the Johannesburg Stock Exchange (JSE) and the Australian Securities Exchange (ASX). The study found that South African entities classify exploration and evaluation assets as tangible or intangible assets using International Financial Reporting Standard (IFRS) 6. The study also observed that Australian entities classify exploration and evaluation assets as a separate class of assets using the Australian Accounting Standard Board (AASB) 6. South African entities depreciated or amortized exploration and evaluation assets, while Australian entities did not. The study concluded that even though there is high adoption of IFRS 6 or AASB 6, comparability is compromised in the extraction industry. The study recommended that IFRS 6 not offer a choice between IAS 16 or IAS 38 for the classification of exploration and evaluation assets to improve comparability and aid effective decision-making.

Suggested Citation

  • Christa Van der Walt & Banele Dlamini & Danie P Schutte, 2023. "Exploring the Accounting Treatment of Exploration and Evaluation Activities in the Extraction Industry in South Africa and Australia," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 30-34, November.
    • Handle: RePEc:eco:journ1:2023-06-4
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijefi/article/download/14907/7613
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijefi/article/view/14907
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aydin Karapinar & Figen Zaif & Salih Torun, 2012. "Accounting Policies in the Extractive Industry: A Global and a Turkish Perspective," Australian Accounting Review, CPA Australia, vol. 22(1), pages 40-50, March.
    2. Vespestad, May Kristin & Clancy, Anne, 2021. "Exploring the use of content analysis methodology in consumer research," Journal of Retailing and Consumer Services, Elsevier, vol. 59(C).
    3. Sidney J. Gray & Niclas Hellman & Mariya N. Ivanova, 2019. "Extractive Industries Reporting: A Review of Accounting Challenges and the Research Literature," Abacus, Accounting Foundation, University of Sydney, vol. 55(1), pages 42-91, March.
    4. Hafez Abdo, 2016. "Accounting for Extractive Industries: Has IFRS 6 Harmonised Accounting Practices by Extractive Industries?," Australian Accounting Review, CPA Australia, vol. 26(4), pages 346-359, December.
    5. Cortese, Corinne & Irvine, Helen, 2010. "Investigating international accounting standard setting: The black box of IFRS 6," Research in Accounting Regulation, Elsevier, vol. 22(2), pages 87-95.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Corinne Cortese & Lee Moerman & Millicent Chang, 2022. "Is the extractive industries standard still fit for purpose?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2807-2838, June.
    2. Christopher Nobes & Christian Stadler, 2021. "Towards a Solution to the Variety in Accounting Practices of Extractive Firms under IFRS," Australian Accounting Review, CPA Australia, vol. 31(4), pages 273-285, December.
    3. Tega Anighoro, 2020. "Value relevance of the components of oil and gas reserve quantity change disclosures of upstream oil and gas companies in the london stock exchange," Papers 2005.14659, arXiv.org.
    4. Alessandro Paolo Rigamonti & Giulio Greco & Mariarita Pierotti & Alessandro Capocchi, 2024. "Macroeconomic uncertainty and earnings management: evidence from commodity firms," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1615-1649, May.
    5. Urska Kosi & Antonia Reither, 2014. "Determinants of Corporate Participation in the IFRS 4 (Insurance Contracts) Replacement Process," Accounting in Europe, Taylor & Francis Journals, vol. 11(1), pages 89-112, June.
    6. Power, Sean Bradley & Cleary, Peter & Donnelly, Ray, 2017. "Accounting in the London Stock Exchange's extractive industry: The effect of policy diversity on the value relevance of exploration-related disclosures," The British Accounting Review, Elsevier, vol. 49(6), pages 545-559.
    7. Amir Ghorbani & Hossein Mousazadeh & Farahnaz Akbarzadeh Almani & Masoud Lajevardi & Mohammad Reza Hamidizadeh & Mehrdad Orouei & Kai Zhu & Lóránt Dénes Dávid, 2023. "Reconceptualizing Customer Perceived Value in Hotel Management in Turbulent Times: A Case Study of Isfahan Metropolis Five-Star Hotels during the COVID-19 Pandemic," Sustainability, MDPI, vol. 15(8), pages 1-19, April.
    8. Cosmas Odo & Wilson Ani & Philip Obialor & David Ugwunta, 2016. "To What Extent do United Kingdom Companies Provide Oil and Gas Reserves Information Sufficient to Satisfy Statement of Recommended Practice Requirements?," Australian Accounting Review, CPA Australia, vol. 26(1), pages 34-44, March.
    9. (Daisy) Lyu, Jing & Krasonikolakis, Ioannis & Vrontis, Demetris, 2022. "A systematic literature review of store atmosphere in alternative retail commerce channels," Journal of Business Research, Elsevier, vol. 153(C), pages 412-427.
    10. Nurunnabi, Mohammad, 2014. "‘Does accounting regulation matter?’: An experience of international financial reporting standards implementation in an emerging country," Research in Accounting Regulation, Elsevier, vol. 26(2), pages 230-238.
    11. Tsalavoutas, Ioannis & Tsoligkas, Fanis & Evans, Lisa, 2020. "Compliance with IFRS mandatory disclosure requirements: A structured literature review," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 40(C).
    12. Khan, Muhammad Arif, 2022. "ESG disclosure and Firm performance: A bibliometric and meta analysis," Research in International Business and Finance, Elsevier, vol. 61(C).
    13. Okamoto, Noriaki, 2017. "Norm entrepreneur lobbying and persuasion: A case study involving the IASB's modification of an exposure draft," Research in Accounting Regulation, Elsevier, vol. 29(2), pages 129-138.
    14. Petr, Christine & Caudan, Paul, 2024. "Ethical marketing framework for metaverse simulated experiences of tourism (SET): An exploration of consumers’ aspirations and fears," Journal of Retailing and Consumer Services, Elsevier, vol. 79(C).
    15. Simone Pizzi & Sara Moggi & Fabio Caputo & Pierfelice Rosato, 2021. "Social media as stakeholder engagement tool: CSR communication failure in the oil and gas sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(2), pages 849-859, March.
    16. Samira Demaria & Dufour Dominique & Moïse Louisy-Louis & Philippe Luu, 2012. "An exploratory study of the exposure draft of IAS 19 due process," Post-Print halshs-00721326, HAL.
    17. Islam, Majidul & Hossain, Ashrafee Tanvir, 2017. "Compliance with accounting standards by financial Institutions: Some evidence from Bangladesh," Research in Accounting Regulation, Elsevier, vol. 29(2), pages 145-151.
    18. Rigamonti, Alessandro Paolo & Greco, Giulio & Capocchi, Alessandro, 2024. "Futures, provisional sales, and earnings management in the global gold mining industry," Finance Research Letters, Elsevier, vol. 59(C).
    19. Musa Ghazwani & Mark Whittington & Akrum Helfaya, 2023. "Assessing the Anti-Corruption Disclosure Practices in the UK FTSE 100 Extractive Firms," Sustainability, MDPI, vol. 15(6), pages 1-33, March.
    20. Misund, Bård, 2015. "Accounting for Oil and Gas Exploration Activities: A Triumph of Economics over Politics," UiS Working Papers in Economics and Finance 2015/15, University of Stavanger.

    More about this item

    Keywords

    Extraction industry; Exploration and evaluation assets; IFRS 6; AASB 6; Accounting treatment; South Africa; Australia;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2023-06-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.