OIL AND GAS ACCOUNTING: PRACTICE, CHALLENGE AND SOLUTIONS IN NIGERIA (A CASE STUDY OF NNPC)
ABSTRACT
This study was aimed at assessing accounting practices operated in the oil and gas industry in Nigeria (with a case study of NNPC) particularly to examine the major problems of accounting in the Nigerian oil industry and proffer possible solutions. Also, attempt was made, to assess the role of Nigerian Accounting Standard Board (NASB), the Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN) in developing relevant accounting standards for the industry. Data was collected using both primary and secondary sources with the aid of structured questionnaire. Simple percentages and Chi-square Statistical models were used to analyse the data. It was found that accounting standards for oil and gas industry in Nigeria owe its origin to the methods initially formulated in America and Britain with slight modifications. It was also observed that NASB, ICAN and ANAN play significant role in formulating standards for the oil and gas accounting sector in Nigeria to suit the realities of the time. It was recommended that oil and gas companies in Nigeria irrespective of their origin should show unequivocal commitment in adopting and upholding ethical standards that would lead to improvement in accounting information. The Nigeria National Petroleum Corporation (NNPC) and oil companies should relate functionally with statutory institutions like ICAN, NASB and ANAN with a view to fostering a stronger working relationship. It was also found that making the accounting procedures of this industry a major part of training curriculum will increase the standard and performance of accountants in the industry. Recommendation was therefore made that the NASB in conjunction with stakeholders in the oil and gas sector of the economy and accounting professional bodies should come together and come up with a uniform standard of accounting for this sector of the economy.
CHAPTER ONE
INTRODUCTION
1.1 Background of Study
There is no aspect of life that accounting cannot be applied, and the oil and gas sector is not an exception. Apart from the petroleum product in itself, there are numerous by-products such as gasoline, diesel, kerosene, jet fuel, lubricants asphalt, bitumen, petrochemicals such as pesticide and others, which necessitate serious development of accounting techniques to cater for it accountability.