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Custom Approach Used for Joint Venture Audit

The client was an energy investment fund concerned about the charges its operating partner was passing through to them during a multi-well drilling program.

  • Joint Venture Audit
Solution & Benefits

Utilizing our experience with joint venture audits, JVSA tailored a two-tiered, risk-based audit program, which focused first on the expenditures with the highest likelihood of having a material over charge to our client, and secondly on areas that were mutually agreed to be lower risk. This customized approach allowed the fund to have certainty that if the audit period expired, the highest risk areas had been covered first. A preliminary audit was conducted on these expenditures, which identified large cost over-charges to the fund. Based on the results of the preliminary audit, the second audit was conducted on remaining expenditures and further over-charges were identified.

Beyond the financial benefits of conducting the joint venture audit (which were close to ten times the cost of the audits), the client also was able to report back to shareholders that proper procedures were being followed and due diligence was being performed. Furthermore, the client was able to approach its partner about its concerns and have open and informed communication, which increased the mutual trust between the two parties moving forward.

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