Organisational Characteristics, Environmental Factors and Accounting Methods for Depletion, Depreciation and Amortization (DD&A) in Oil and Gas Companies in Tanzania
Keywords:
Organisational Characteristics, Environmental Factors, Accounting Methods for DD & A, and Oil and GasAbstract
Oil and gas companies are unique in terms of accounting policies and practices. Despite such uniqueness, the oil and gas companies still face the challenge of having a mismatch between revenues and expenses which is significantly contributed by the way an expense on the use of fixed assets is done. Then, the focus of this study to examine factors that influence the choice of accounting policy for DD&A. The study involved 119 petroleum and natural gas companies that were categorised into seven groups. Questionnaire and documentary review were used as data collection methods while hierarchical multiple regression was used as data analysis techniques. The findings revealed that company’s structure as the organisational characteristics significantly and positively predicts the choice of reducing balance accounting methods. Firm age significantly and positively predicted the choice of the straight-line method; however, it is relatively weak and reducing balance method. It was further revealed that disclosure requirements had significant positive influence on the choice of the straight-line, reducing balance and unit of production accounting methods. It was further revealed that capital market requirements had different mediating effect on the influence of the selected organisation characteristics and disclosure requirements on the choice of accounting methods for DD and A. Among others, it is recommended that managers should recognise the different influence of company’s structure, firm age and disclosure requirements on the choice of accounting methods for DD and A.