oa Journal of Economic and Financial Sciences - An analysis of the accounting practices of junior exploration companies in South Africa
|Article Title||An analysis of the accounting practices of junior exploration companies in South Africa|
|© Publisher:||University of Johannesburg|
|Journal||Journal of Economic and Financial Sciences|
|Affiliations||1 University of South Africa and 2 University of South Africa|
|Publication Date||Oct 2014|
|Pages||681 - 696|
|Keyword(s)||Accounting policies, accounting practices, Exploration and evaluation assets, Exploration expenditure, IFRS 6, Junior exploration companies and Pre-exploration expenditure|
IFRS 6, Exploration for and evaluation of mineral resources, allows junior exploration companies to develop their own accounting policies with regard to exploration and evaluation expenditure. This will result, as indicated by the research problem, in inconsistent accounting practices among different companies. The objective of this article is to identify the various accounting treatments of exploration expenditure and to develop recommendations for consistent application of accounting practices. Relevant literature is critically analysed and the judgement sampling method is used to select junior exploration companies to participate in a self-administered survey to identify the various accounting treatments of exploration and evaluation expenditure by junior exploration companies. The findings of this study show that, despite the time and resources expended by the International Accounting Standards Board (IASB) in the extractive activities project, nothing has changed in the last 40 years. Progress in the standardisation of accounting for exploration and evaluation expenditure can be made if the exemptions included in IFRS 6 are removed or only the successful-efforts method incorporated into IFRS 6.
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