The US Federal Accounting Standards Advisory
Board (FASAB) has issued standard on accounting for federal oil and
Federal reserves are the estimated quantities
of oil and gas under federal land that is believed to be
recoverable in future years under existing economic and operating
SFFAS 38 Accounting for Federal Oil and Gas
Resource provides a three-year period of experimental reporting,
meaning the reserves do not have to be valued and included in the
By requiring the federal government to report
its royalty share of estimated oil and gas production, the FASAB
hopes to gain insight into the challenges associated with valuing
these assets and liabilities.
In addition to the values, a discussion of all
significant federal oil and gas resources under management by the
federal government – including those not yet “proved” – is required
to provide context for the reader.
The board has taken a different accounting
approach that in other standards because of the volatility and
uncertainty that is inherent in oil and gas reporting.