SOX in the mining industry 1270



  • Many of the posts on this forum relate to the IT industry. I would like to get some pointers from anyone who has been involved in incorporating SOX compliance in the mining or natural resources industries (compiling controls matrices and auditing against it). Appreciating any inputs.



  • I’m not sure that the mining industry is any different from Section 404 documentation and key control testing for manufacturing, in general. In this case, the mined product is ‘inventory’ and all controls over the ‘production’ (mining) would apply. It may be an over-simplification, but as far as SOx is concerned, widgets manufactured and sold is analogous to coal mining and sales.
    I realize that there will always be specific differences such as revenue recognition or particular accounting issues, but that’s true of any industry. To that extent, the Oil and Gas industry probably has the most differences from most other industries, but even then, the Key Controls exist and are, roughly, the same.
    Most of the differnces pertain to a specific situation (company and it’s practices), rather than the industry.



  • SOX in the Mining Industry can be quite challenging. Some quick thoughts:

    • Mateials Extraction and Processing requires signifcant use of management estimates and may have a financial reporting impact if GAAP is not consistently applied.
    • A Google search for resources using the terms ‘Mining and Construction Industry’ might lead you to specific information or some useful resources. ‘Mining’ alone results in too many non-relevant ‘hits’…i.e., returns ‘Determining’ and related derivations.
    • Some companies might use derivatives and hedging strategies to manage risk. I have a good document (57 pg pdf file) that I can forward to you that specifically addresses Hedging in the Mining Industry. The resource addresses accounting implications, risk management, and other potential SOX concerns.
    • On AuditNet, auditnet.org/docs/InventoryAPG-Mining.doc, an APG may also be found and useful.
    • Finally, the Mining Industry is a well-developed and mature industry. Previously, the AICPA had developed audit guides for specific industries. You might want to query their publications to see if they have published an Audit Guide for the Mining Industry. If so, it will be very helpful since it will focus on financial reporting aspects, and therefore, useful as a guide to comply with SOX.
      Hope this helps,
      milan
      /please write back with your e-mail address/contact number and I will be happy to send you the pdf for the Derivatives in the Mining Industry document.


  • Thanks Milan, any input will be appreciated. You can reach me or forward me info at fgrobler_at_snowden.co.za.



  • I realize that there will always be specific differences such as revenue recognition or particular accounting issues, but that’s true of any industry. To that extent, the Oil and Gas industry probably has the most differences from most other industries, but even then, the Key Controls exist and are, roughly, the same.
    Confirmed. My company work with Oil and Gas related, and all the information / issues on this forum is very much relevant to all of us.



  • Hi Francois,
    I forwarded three docs to your email address and trust that you will find them helpful.
    Regards,
    Milan



  • Milan,
    Came across you entry while looking for risk information re sox and hedging and derivatives, would be interested in receiving a copy of your the 57 page document you mention below. I’m currently working with an Oil and Gas company assisting with compliance.
    Thanks A_C
    SOX in the Mining Industry can be quite challenging. Some quick thoughts:

    • Mateials Extraction and Processing requires signifcant use of management estimates and may have a financial reporting impact if GAAP is not consistently applied.
    • A Google search for resources using the terms ‘Mining and Construction Industry’ might lead you to specific information or some useful resources. ‘Mining’ alone results in too many non-relevant ‘hits’…i.e., returns ‘Determining’ and related derivations.
    • Some companies might use derivatives and hedging strategies to manage risk. I have a good document (57 pg pdf file) that I can forward to you that specifically addresses Hedging in the Mining Industry. The resource addresses accounting implications, risk management, and other potential SOX concerns.
    • On AuditNet, auditnet.org/docs/InventoryAPG-Mining.doc, an APG may also be found and useful.
    • Finally, the Mining Industry is a well-developed and mature industry. Previously, the AICPA had developed audit guides for specific industries. You might want to query their publications to see if they have published an Audit Guide for the Mining Industry. If so, it will be very helpful since it will focus on financial reporting aspects, and therefore, useful as a guide to comply with SOX.
      Hope this helps,
      milan
      /please write back with your e-mail address/contact number and I will be happy to send you the pdf for the Derivatives in the Mining Industry document.


  • hi Albert,
    you can write to me at 404cpa_at_gmail.com from your work email account (no personal yahoo, gmail, hotmail, yahoo, freemail), and we can discuss further.
    i apologize, but i am unable to share the document if you are not directly employed with the company or if you are serving in an advisory or consultant capacity.
    thank you in advance for understanding,
    milan


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