LUNATICS, ASYLUMS AND ALL THAT
Ten years ago I was invited onto an advisory panel for the International Accounting Standards Board led by a well-known audit f irm to aid in their mission to broadly try and accomplish three things in the basic materials accounting practises: 1. Converge reporting standards of oil and
gas and mining companies globally, 2. Converge reporting standards of US and non-US companies in the basic materials sector, But more fundamentally, 3. Propose a move towards full, fair value accounting, which for mining businesses would mean a full mark-to-market of reserves and resources at least annually. will improve investors’ understanding of the value of financial position of a company, especially private investors. As far as I know, this still has not been enacted. Another issue that was highlighted to me was that the way in which resource companies are representing finances and financial performances to investors was removed from reality.
Fortunately it was creating all sorts of additional work for audit firms that mining companies would be obliged to comply with and pay for.
Looking back to about 1999, most South African mining companies reported according to an “antiquated” and “thoroughly outdated” accounting system that was essentially based on the principles of cash-f low accounting. almost all cash-f low items in the given period in which they occurred. Fortunately the tax system was broadly aligned with this is that, it was really cheap and easy to audit. understand and, more importantly, plain to see whether your mining investment was in fact making any money or not, what its