Benefits and Procedures of Conducting an Audit
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Russ: This is the PKF Entrepreneur’s Playbook. I’m Russ Capper, this week’s guest host, and I am here with Brian Baumler, once again, a Senior Vice President with Joint Venture Strategic Advisors and an Audit Director with PKF Texas. Welcome back to the Playbook Brian.
Brian: Thank you very much, Russ, I really appreciate it.
Russ: So we are talking about these joint ventures, and you are coming in to help them out. Do people invite you in most often because they suspect something is wrong with the joint venture?
Brian: Well I think some of it is that, but a lot of it is because each of these arrangements they enter into having a standard requirement to allow for an audit. So many of them execute their right to have an audit. And when they do, we’re typically engaged by the party that is typically not the operator. And the reason being is because the operator in most cases has unilateral authority to execute on behalf of the none operating party. So, because of that arrangement alone, typically there is some suspicion.
Russ: And there really is a time limit by which if they don’t find something that’s wrong, then it sort of goes off the books?
Brian: That’s a great question. About 90 percent of work we do happens to represent joint venture arrangement in oil and gas development programs, and they actually have a two-year window. And once you, you lose your right to perform an audit if you don’t put the operator on notice, you’ll want to have that audit done. So at the two-year point, yup, those years start dropping off and once the two-year window has lapsed the operator is really not at that interest to allow you to come back.
Russ: Wow, sounds like you need to pay attention to the calendar.
Russ: Well I really appreciate it and want you to come back and maybe do this again.
Brian: Thank you so much, Russ.
Russ: You bet. For more about Joint Venture Services, visit www.jvsa.com. This has been another Thought Leader Production brought to you by the PKF Texas Entrepreneur’s Playbook.