Classification of petroleum fiscal systems

		Petroleum fiscal arrangements
		The first branch deals with the “title” to the mineral resources. Concessionary systems allow private ownership. In contractual systems the state retains ownership.
Concessionary royalty/tax systems ± 50 % of countries								Contractual systems
Net revenue interest reserves are ordinarily “booked”
			The primary difference rests on whether the "fee" is taken in "cash" (service) or in "kind" (PSC)
	Service contracts ± 5 % of countries								Production sharing contracts ± 45 % of countries
	Preserves are not ordinarily “booked” * Some countries use more than one system								Entitlement reserves are ordinarily “booked”

Text 2

Pre-reading task

a) Discuss the following questions before reading the text.

1. Have you ever heard or read that a particular company has problems with revenue authorities? What company was it? What was the problem?

2. Do all businesses in Russia pay taxes in full? Why do you think some of them try to avoid taxes? What should the authorities do with such companies? Do you know what the auditors deal with?

b) Key words: audit, accountant, financial records, irregularity, misappropriation, fraudulent, to annul, assessment, to invalidate.

Look up the key words in the dictionary to find out the exact meaning.

Reading Auditors and their reports

Auditors are usually independent certified accountants who review the financial records of a company. These reviews are called audits. They are usually performed at fixed intervals - quarterly, semiannually or annually. Auditors are employed either regularly or on a part-time basis. Some large companies maintain a continuous internal audit by their own accounting departments. These auditors are called internal auditors.

Not so many years ago the presence of an auditor suggested that a company was having finacial difficulties or that irregularities had been discovered in the records. Currently, however, outside audits are a normal and regular part of business practice.

Auditor's see that current transactions are recordered promptly and completely. Their duty is to reduce the possibility of misappropriation, to identify mistakes or detect fraudulent transactions. Then they are usually requested to propose solutions for these problems.

Thus auditors review financial records and report to the management on the current state of the company's fiscal affairs in the form of Auditor's Report or Auditor's Opinion.

Comprehension check

I. Answer the following questions.

1. What do auditors do?

2. Audits are planned actions, aren’t they?

3. What did the presence of an auditor in a company suggest in the past?

4. What is auditors’ duty?

5. In what form do the auditors make their report?

6. What is the difference between internal and independent auditors?

II. Say if the statement are true or false.

1. Auditors are usually chiefs of accounting departments.

2. It is quite usual when an auditor comes to a company anytime he/she likes.

3. Internal auditors are employees of the same company where they make audit.

4. If auditors review the financial records of a company, it doesn’t mean that this company has some problems.

5. Auditors are supposed to know how to solve financial problems.

Reading for Purpose

Read a specimen of Independent Auditor’s Report (Transneft annual Report, 2003) and find information on.

1. the names of the auditing and audited companies;

2. the reason of Transneft’s changing its auditor;

3. the names of the documents to be complied with while conducting audit;

4. characteristics of an emerging market.