Description: Exxon calls it “baseless allegations.” But the New York Attorney General is moving ahead with a lawsuit, saying Exxon deliberately understated the potential liability for dealing with carbon costs in Canada’s oil sands. Right now the Attorney General is floating a figure of approximately $30 billion in understatements. The aim of the legal claim seems to be to force Exxon to return money to investors who may have not had the correct information on which to base their investment decisions.
Date: October 26, 2018
1) Were you aware of this legal suit? What is your opinion on who is right and who is wrong?
2) How would accountants develop estimates for these carbon costs?
3) If you were an auditor, how would you go about developing an audit program to verify these cost estimates? What sort of audit engagement would this be? (Hint: See chapter one in Wiley’s Auditing: A Practical Approach.)