US Joint Venture Audit
BRI provides a full range of joint venture auditing services in the United States. Whether the client has a working or royalty interest in a small field, the deep-water Gulf of Mexico or is involved with drilling hundreds of shale wells, we have sufficient resources and experience to properly manage the project. BRI has successfully assisted our clients with the outsourcing of their Joint Venture audit department functions involving the management of their world-wide auditing programs.
Responsibilities included:
- Review client’s project spend to identify audit candidates to management
- Prepare and manage the annual audit department budget
- Coordinate and submit Ballots to other non-operators to initiate audits
- Contact Operators to determine their availability and confirm audit field work
- Review joint operating agreements and determine agreed upon charging methods
- Analyze JADE or RADE files in conducting pre-work to reduce fieldwork time
- Coordinate staffing and conduct fieldwork
- Work with Operator to process undisputed corrections during fieldwork
- Preparation of audit reports for management review
- Issue audit reports and invoices to participating Partners
- Assist or represent client in resolving uncorrected or disputed items
- Examine billing statements to verify that agreed adjustments are properly recorded
Audits of the “expenditures” billed to our clients through the joint interest billing (JIBs) statements are the most frequently conducted type of audits. These audits are a routine aspect of the industry and should be performed either annually or every two years depending on the complexity of the agreement and the level of spending associated with the project. These audits very-commonly generate recoveries exceeding the cost of the audit and help stem problems at an early stage.
Expenditure audits are commonly organized by the largest non-operator in a joint operation, but other non-operators should initiate an audit if the largest non-operator fails to act. In some cases, non-operators may elect to send representatives to join our team and costs are shared proportionately based on the working interest percentage of all participating non-operators. Once approved, recoveries identified by the auditor are credited to the joint account and shared with all working interest owners.
During an expenditure audit, we ensure that charges comply with the terms of the JOA and the attached “Accounting Procedure” exhibit.
Items that we commonly test include:
- Charges relate to the audited property
- Working interest ownership interests are correct
- Costs covered by overhead are not billed directly
- Overhead fees correctly escalated and billed
- Field and technical labor charges appropriate
- Payroll benefit/ burden rates within COPAS guidelines
- Allocation methods follow industry practice and applied properly
- Discounts taken and shared on purchases
- No out-of-period charges, duplicate charges, overcharges
- Major purchases charged according to vendor contract
- Material-from-inventory charges correct
- Sales tax and transportation charges correct
- Charges for operator-owned equipment fair and correct
- Charges from Operator-affiliated companies fair and correct
- Boat/helicopter charges allocated fairly and correctly
- Insurance, professional and legal charges correct
- Surplus materials disposed of and credited
- Capital expenditures:
- Necessary AFE approvals obtained
- Work program consistent with AFE
- Significant overruns examined
- Rig costs charged correctly to wells
- Drilling supplies/materials correlate with drilling reports
- Casing and tubing charges correlate with well file
- Completion costs correlate with work report
- Equipment/facility charges correlate with design
- Pad costs allocated properly on multiple-well pads
- Charged but unused material credited to well
- Accounting for non-consent interests
- Accounting for carried/farmout arrangements
We also perform a variety of special-purpose audits such as Closing Statement audits after an acquisition is completed. Information on services relating to revenue and gas plant audits are covered under “Support Services”.
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Because we are bound by confidentiality, we are not able to publicly list those clients to whom we have provided services. However, below is a sample of the companies that we have successfully audited in the past few years.