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Accounting for Oil and Gas: The effect of the gap between US GAAP and IFRS on Norwegian companies
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE).
2011 (English)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]



Oil and gas is a main source of revenue for many countries. Norway is one of them. Several companies operate in these countries. The companies demand accounting to communicate to their stakeholders. The two biggest accounting regimes, IASB and USA have their own standards for the upstream activities of those companies. The standard setting bodies mandatorily require companies to comply. Norwegian listed companies, as they are in the IASB regime, must comply with the IASB standard, IFRS 6.


The IASB standard has a problem of addressing the entire upstream activities of the companies Moreover, the standard has conceptual flaw. However, these oil and gas firms are required to follow it. As a remedy, the entities fill the gap by using the US GAAP, if they are listed, as the regulation requires them to follow IFRS. Thus, using these two standards coupled with the defect of the IASB standard is affecting them.


The purpose of this thesis is to explain the effects of IFRS 6 on companies by comparing it with the US GAAP standard. In doing so, theories relevant to the issue are described and the technical gaps between the two standards are elaborated.


This thesis uses mixed method. The research design followed is concurrently mixing quantitative and qualitative methods. However, qualitative method dominates in the mixing. As a data collection mechanism, interview, questionnaire and documentation i.e. the annual reports of the companies are used. In the study both deductive and inductive reasoning are used.


Subsequent to making the study, the author concludes that the surveyed companies have used the US GAAP to fill the gap that IFRS possess. However, retaining two sets of accounts has economic effect and the companies are paying for that. Moreover, they expend costs for adopting the IFRS when they change their standard from US GAAP to IFRS. Moreover, it is difficult to make conclusion about diffusion of accounting method due to contagion effect. Similarly, although previous studies show that size of a firm is a determinant factor, it is tricky to make conclusion on the studied companies.

Place, publisher, year, edition, pages
2011. , 46 p.
Keyword [en]
Accounting for oil and gas, IFRS 6, the gap between IFRS and US GAAP, Norwegian oil and gas companies
National Category
Business Administration
URN: urn:nbn:se:umu:diva-51283OAI: diva2:478518
Social and Behavioural Science, Law
Available from: 2012-01-30 Created: 2012-01-16 Last updated: 2012-01-30Bibliographically approved

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