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Forensic Auditing Techniques Crucial for Effective Oil and Gas Revenue Management in Guyana

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A recent audit of ExxonMobil Guyana’s accounts for the period 2018-2020, encompassing 260,000 transactions worth US$7.3 billion, has raised concerns about the quality of the audit due to its limited scope and duration.

Limited Scope and Duration of Audit

The audit team, comprising only 12 members, including a few Guyanese with no prior experience in auditing oil and gas transactions, sampled transactions and ignored small transactions amounting to less than US$1,000. According to experts, this approach may not have adequately addressed the complexities of the offshore expenses involved in exploring and extracting oil from ultra-deep fields.

Concerns about Audit Team Expertise

The Oil & Gas Guyana Network (OGGN) has questioned whether the audit team had the necessary oil field expertise to verify the costings of these big-ticket engineering items, which are critical in determining the revenue flows to Guyana. The recent audit, which was completed within four months, may have overlooked significant transactions that could impact Guyana’s revenue.

Call for Forensic Audit

The OGGN has urged the Government to commission a full-scale forensic audit of ExxonMobil Guyana’s 2018-2020 accounts and to insist on this kind of audit for all subsequent years. The Auditor-General and the Guyana Revenue Authority should also work closely with international authorities, such as the US Securities and Exchange Commission and the US Internal Revenue Service, to verify transfer pricing and other means by which ExxonMobil Guyana may be trying to inflate costs and reduce legitimate taxes.

Alternative Revenue Management Model

The OGGN has long advocated for a Gross-Split Model, where Guyana receives 55 out of every 100 barrels of oil, eliminating situations like this one where complex and costly audits are required. The network believes that such an approach would simplify revenue management and reduce the need for lengthy and expensive auditing processes.

Call to Action

In light of these concerns, the OGGN has called on the Government to take immediate action to ensure that forensic auditing techniques are used to verify ExxonMobil Guyana’s accounts and ensure that Guyana receives its fair share of oil revenues.

Key Recommendations:

• Commission a full-scale forensic audit of ExxonMobil Guyana’s 2018-2020 accounts
• Insist on this kind of audit for all subsequent years
• Work closely with international authorities to verify transfer pricing and other means of cost inflation
• Consider implementing the Gross-Split Model for oil revenue management