WGEI Newsletter Issue No. 3 – November 2015

The content of this newsletter

Introduction

  • About this issue
  • Introducing the two new members of the Community of Practice and the WGEI Secretariat

Need to know

  • The case for collaboration between Supreme Audit Institutions and the Extractive Industries Transparency Initiative (EITI) (by Bady Balde EITI)
  • How and why Base Erosion and Profit Shifting (BEPS) is relevant for the SAI community (By August Schneider, OAGN)
  • The OECD/G20 Base Erosion and Profit Shifting Project Has Delivered Stronger Transfer Pricing Rules (By Dan Devlin, OECD)
  • The Shale Gas Boom – How Does It Affect Current And Aspiring Gas Producers? (By Trygve Christiansen and Eli Wærum Rognerud, OAG Norway)
  • Two “useful links”: Open Oil and Goxi
  • New resources uploaded to the WGEI webpage

Trainings and events

  • A recap of the 2nd WGEI meeting held in Oslo 21-23 September
  • The EITI Global Conference

Members in Action

  • SAI Vietnam: Evaluating the Environmental Management and Rehabilitation on the Mining industry in Thai Nguyen Province, Vietnam

 

Introduction

About this issue: 

Welcome to the third edition of the WGEI newsletter! In this edition of the newsletter you can read about the Base Erosion and Profit Shifting (BEPS) project of OECD and how this is important for the SAI community. EITI gives us a brief introduction into the important EITI standard and you will see examples from audits of the extractive industry sector from SAI Vietnam. We will also give you a quick summary of the 2nd WGEI meeting that took place in Oslo from 21st to 23rd September and how you can access the resources that was shared during the event. Have a nice read!

Introducing two new members of the Community of Practice and the WGEI Secretariat

We are happy to announce that the Community of Practice and the WGEI Secretariat has now been reinforced by two new full-time members contributed by the WGEI Chair, SAI Uganda.

Edward Ssali has recently arrived as deputy coordinator of the WGEI Community of Practice. Edward is a certified public accountant of Uganda and presently senior auditor at the office of the Auditor General of Uganda where he has been for over 14 years. During the last 5 years he has been involved in audit of extractive industries under the energy sector. He recently arrived back to Uganda after completing a MSc. in Oil and Gas Accounting with a distinction from Robert Gordon University in Aberdeen, Scotland. He already holds a master’s degree in management studies (Business Administration) from Uganda management institute. With the WGEI secretariat Edward is going to follow up the implementation of activities in the WGEI activity plan linked to capacity building, resource development and networking.

Emmanuel Angole has recently arrived as the Information Technology Officer of the WGEI Community of Practice, where he is in charge of the WGEI website and Information Technology resources. Emmanuel has been an Information Technology Officer with the Office of the Auditor General of Uganda for over 4 years and his main duties involved the day to day management of the OAGU systems and applications development for the various departments. He holds a BSc. in Information Technology and is currently pursing further studies in Information and Computer Systems Security, Information Systems Audit and E-Governance.

Need to know

The case for collaboration between Supreme Audit Institutions and the Extractive Industries Transparency Initiative (EITI) (by Bady Balde EITI)

The EITI International Secretariat welcomes the opportunity to present the Extractive Industries Transparency Initiative (EITI) in the newsletter of INTOSAI’s Working Group on Audit of Extractive Industries (WGEI). This article provides a brief introduction to the EITI, the reporting process in the 49 implementing countries, and the common interests and opportunities for collaboration with Supreme Audit Institutions.

The goal of the EITI is to promote the good use of natural resources for the benefit of a country’s citizens. The EITI Principles – agreed by government, industry and civil society stakeholders in 2003 – emphasize the importance of transparency by governments and companies in the extractive industries and the need to enhance public financial management and accountability. To achieve this, countries that implement the EITI Standard are required to publish timely EITI reports that reconcile government disclosures on revenues with companies’ disclosures on tax payments. Read More

How and why Base Erosion and Profit Shifting (BEPS) is relevant for the SAI community (By August Schneider, OAGN)

Conservative estimates on loss of revenues due to BEPS, indicates a severe obstacle in financing development and maintenance of public services and deficiency in the assessment and collection of revenues in surprisingly many countries. BEPS is possible due to multinational group`s shift of profit between its entities through cross-border transactions, especially through Transfer Pricing. The fact that some states permit low tax/tax exemptions, opaque registers on ownership and low quality company registration, enhances MNE`s economic incentives to establish a branch etc. in such jurisdictions (tax havens) for profit shifting purposes. Read More

The OECD/G20 Base Erosion and Profit Shifting Project Has Delivered Stronger Transfer Pricing Rules (By Dan Devlin, OECD)

Over several decades and in step with the globalisation of the economy, world-wide intra-group trade has grown exponentially. Transfer pricing rules, which are used for tax purposes, are concerned with determining the conditions, including the price, for transactions within a Multinational Enterprise (MNE) group resulting in the allocation of profits to group companies in different countries. The impact of these rules has become more significant for business and tax administrations with the growth in the volume and value of intragroup trade. Read More

The Shale Gas Boom – How Does It Affect Current And Aspiring Gas Producers? (By Trygve Christiansen and Eli Wærum Rognerud, OAG Norway)

(See full paper on the shale gas revolution, including policy, geopolitical and environmental effects here: link)

Shale gas has been described as a “revolution”, our “bridge to a low carbon future” and indeed “the biggest thing that happened to America”, yet others have branded it an “environmental disaster”. There is little dispute however that the commercial exploitation of shale gas has been, and continues to be, a major game changer in the global energy sector. This article briefly explains the nature of the shale gas boom, its effect on gas markets and prices, and the potential impact on current and aspiring gas and oil producers in developing nations. Read More

Two “useful links”: Open Oil and Goxi

For each issue of the WGEI Newsletter we are going to present one or two essential “useful links” that can be found under the “tools and resources” banner on the WGEI home page (www.wgei.org). The aim is to remind of and draw attention to external resources that we think could be useful in the daily work of auditors at the various Supreme Audit Institutions involved in audit of the extractive industries sector.

www.goxi.org is a World Bank and UNDP initiative that the members of the WGEI secretariat use almost at daily basis to keep up to date with the latest events in the extractive industry sector. From the Goxi page we can read that “GOXI is a space for dialogue and platform for innovation and collaboration serving those actively working on governance issues in the extractive industries”. The blog posts, which are frequently updated, gives a nice overview of the latest updates in the sector. There is also a list of upcoming events and links to relevant job postings.

http://openoil.net is a site with the aim to enhance transparency in the oil sector. On their page you will find material on how to understand oil contracts, with publication for free download. The most interesting feature of the site is possibly that you can download most of the worlds published oil contracts. They also have an interesting map of oil concessions. 

New resources uploaded to the WGEI webpage

Since the last newsletter, 34 new audit reports on both oil & gas and mineral audits, have been uploaded to the “tools and resources” section of the WGEI page. We have also included 8 new resources under the banner “external resources” (such as examples of legislation and an OECD guideline) as well as a 4 useful links. I hope you will find the new resources useful. Do not hesitate to let us know in case your SAI has some resources to share.

Trainings and events

A recap of the 2nd WGEI meeting held in Oslo, Norway 21-23 September

The 2nd WGEI meeting took place in Oslo, Norway, from 21st to 23rd September with participants from 19 of the WGEI member countries.  The meeting consisted of both a technical program and more strategic sessions with the development of the WGEI as an aim. The participants could follow presentations and panel discussion on important themes such as transfer pricing and local content. The presenters for this year’s meeting came from organizations such as OECD, EITI, Publish what you pay, Industry interest groups and of course from the SAIs themselves.

The second day of the meeting a session was organized in order to update the WGEI activity plan. Input from this session was collected and has served as a base for the new plan that is presently being elaborated.

Those WGEI members who did not have the pleasure of attending the meeting, or those who would simply like to recap on some of the content, will find all the presentations available on the WGEI site through this link. On the same page you can also find the minutes of the meeting as well as the annual report.

The EITI Global Conference

The 7th EITI Global Conference is scheduled to take place on 24th and 25th of February 2016 in Lima, Peru. The conference, which is organized every 2-3 years, brings together participating countries, industry and civil society representatives to discuss important policy issues related to EI governance.

From the EITI website: “The 2016 EITI Conference will focus on highlighting the results from implementing the EITI Standard, informing policy dialogue, and integrating the EITI into how governments and companies operate. Speakers and participants include high-level representatives from governments, extractive companies, investors, civil society and international organisations. The 49 implementing countries will present progress and innovations in a National Expo alongside the Conference.”

More information on the EITI global conference can be found through this link: http://www.lima2016.eiti.org/

Members in Action

SAI Vietnam: Evaluating the environmental management and rehabilitation on mining industry in Thai Nguyen Province, Vietnam

On 15 October 2015 the State audit office of Vietnam (SAV) launched a performance audit that aims to evaluate the environmental management and rehabilitation on mining industry in Thai Nguyen Province. The audit was performed as results of a survey that gathered initial information and data of environmental rehabilitation on mining industry in Thai Nguyen Province for the period 2012-2015. Read More

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