Discuss about the Accounting Theory for Annual Report and Accounts.
Throughout the history of UK, the deepwater horizon or BP oil spill is regarded the biggest because the explosion near the Gulf of Mexico destroyed many lives. Further, it also destroyed many businesses including the tourism and fishing industry. As a result, the responsible companies of this disaster faced major financial difficulties, as they had to compensate for the same. Moreover, an attorney group was also framed so that the proceedings related to the same can be conducted and the affected people could be offered necessary aid. The impact of the spill was so huge that even other states were badly affected and many lawsuits were initiated against the company (Broder, 2012). Due to such massive destruction, protection and conservation of the environment are being significant importance. Further, the disclosure mechanism is also required in the current scenario so that an enhanced performance can be obtained.
BP was the prime player in such disaster and thus, it had to tackle every consequence related to the same. Therefore, the stand of BP and inefficiency on the part of regulatory authorities will be done. Besides, this report also intends to evaluate the environment so that impact of such disaster causing mass destruction can be determined. In addition, the financial situation will be also evaluated through this study. The prime intention of this research is to shed light into the inefficacies prevalent in the statutory authorities that resulted in the degradation of ethics and corporate governance practices as a whole (Cleveland, 2010). This study also focuses on the fact that the prevalence of several regimes could have safeguarded such a situation.
Due to the spill, it became compulsory for the company to restore the entire affected area and economy as a whole. For such purpose, it spent huge resources that could compensate for the same. This can be proved by the fact that the company for addressing such requirement kept $37.4 billion separately (Mason, 2010). The reason behind such huge amount can be attributed to the fact that there were various activities that required huge resources that would ultimately enhance the public image of the company and minimize the impact of the spill as a whole. The company also expended $20 billion for the trust formed in relation to the same. Nevertheless, when the goodwill of BP came at stake, it was forced to take relevant steps and prudence was not undertaken before the disaster (BP Gulf Update, 2012).
It was the prime responsibility of BP to initiate the cleanup process so that the impact can be minimized. The response could be observed in the form of tools and strategies that were framed to collect the oil from the water. For such purpose, BP engaged more than 90,000 individuals and 5000 vessels so that the process could be rapidly undertaken. This process of skimming resulted in the collection of 8,27,047 vessels that depicts the fact of the prevalence of massive amounts of oil in the water (Jacobson, 2013).
CSR or corporate social responsibility is that tool or framework that assists a company in adherence with all moral or ethical standards. Besides, various oil organizations like Marathon, Chevron have incorporated CSR activities into their affairs and in the present situation, regulatory authorities must take effective steps to ensure that corrective actions are taken in the event of such disastrous situation (Upton, 2011)
BP was indulged with many federal agencies so that the restoration process could be maximized. Such agencies assisted the company in carrying out Natural Resource Damage evaluation so that the real picture of the situation can be highlighted and corrective actions in relation to the same can be undertaken. For such purpose, it spent more than $600 million so that no problems could incur especially in relation to financial outcomes (Mason, 2010). Nonetheless, this evaluation came out to be the biggest NRD evaluation ever undertaken under the Oil Pollution Act.
In relation to the restoration of wildlife habitats, the company also implemented various surveys and measures. Besides, more than 12000 observatory surveys were also conducted so that birds can be safeguarded. Further, in order to safeguard the sea animals, several rehabilitation centers were opened for protection of the turtles (CBS Chicago, 2013). This can be proved by the fact that around $22 million was spent for the purpose of wildlife habitat.
A powerful strategy was not present that resulted in a huge chain of events. Further, the management did not focus towards competing interest; the inefficacy can be associated with the rules of the environment and the federal government that were highly violated. The theory of public interest also highlights the institutions that play a very significant part in safeguarding the economic effectiveness. Further, it is the agency’s role to implement proper measures in relation to the emergence of any contingencies. Besides, it must also be ascertained when such decisions must be allotted to the independent statutory bodies. However, government trustees found it inappropriate to analyze the items and services lost from the ecosystem.
Based on the oil spill scenario, it could be found that the statutory system was not proper in nature that resulted in the downfall of the tragedy. Besides, based on various surveys, it was observed that the prevalence of a regulatory system could have prevented such a tragedy. Such misbalance depicts that the theory of public interest was not properly taken into account (Cherry & Sneirson, 2010). Furthermore, corporate governance and ethics were also inefficient that enhanced the problem. On a whole, the agencies did not pursue proper tools that were necessary to safeguard the environment and public as a whole. The enforcement resources were also not entirely available in this scenario.
The politicians as major regulators assist in offering firmness to the company’s affairs, as the regulatory strategies are formed with efficiency and flexibility. As a result, the significant impacts can be properly known. Besides, this is associated with the normative ideologies because such politicians frame the rules to safeguard public interest as a whole. Further, regulations also assist in assuring that the common people are highly at advantage (BP Plc, 2014). On a whole, politicians play a key role in the formulation of relevant plans and policies that can assist in the smooth functioning of the company.
BP oil spill resulted in the development of new and efficient plans and policies. Further, the inefficacies prevalent in the case of BP clearly highlight the insufficiencies of CSR (corporate social responsibility). It must also be noted that BP took relevant actions to restore the tragedy only after the occurrence of oil spill and investigation thereafter. On a whole, the criminal charges and fines were not adequate in nature and punishment cannot alone create a valuable impact. The statutory operations must be strengthened by the emergence of innovative rules and ethical standards (Broder & Krauss, 2012). Further, the function and responsibility of the agency must also be concise so that immense pressures could be handled. In addition, monitoring and enforcement must also be given prior consideration so that production and exploration activities can be done after prior approval.
On a whole, appropriate disclosures must be adequately offered in the annual report. This can offer an update on the condition to the organizations that can assist them in having a reference on the ecological matters before the arrival of adverse situations. Nevertheless, a proper statement of charges, liabilities, and revenue associated with the environment must be properly considered so that a sufficient estimate can be ascertained (Jefferson & Bowling, 2011).
British Petroleum endeavored to become the biggest market player but it disregarded due to focus on social and environmental conservation. Besides, there was no framework for the fulfillment of required regulations. This makes it clear that it is the duty of government to supervise the functioning of such petroleum companies so that future scenarios can be prevented. Furthermore, it is the duty of companies to operate in a moral way by submitting every policy associated with the hazardous program so that corrective actions can be implemented during any uncertain event. Moreover, the setup of advisory board can also be undertaken so that it operates independently and assists in providing relevant emphasis upon the matters.
Conclusion
A lawful team is always needed to look after the financial losses especially when it is related with bigger players like BP. The amount of resources spent by the company clearly portray that major issues were encountered by it and even its share prices went drastically down. This is the reason why CSR activities must be duly considered so that adverse situations can be prevented in the initial stages (Fodor & Stowe, 2010). Hence, to safeguard such a tragedy, proper committee and provision are required to supervise the matter and without accounting for such sensitive matters, companies like BP cannot aim to attain the largest share of the market.
References
BP Gulf Update 2012, BP Protecting Wildlife, viewed 21 September 2017, https://www.bpgulfupdate.com/external/content/document/4699/1469631/1/WILDLIFE_Fact_Sheet_FINAL_2-23-12.PDF.
Broder, J. M 2012, Ruling Favours Owner of Rig in Gulf Spill, The New York Times, viewed 21 September 2017, https://www.nytimes.com/2012/01/27/business/energy-environment/transocean-not-liable-for-some-gulf-spill-claims-judge-rules.html.
Broder, J. M., & Krauss, C 2011, Regulation of Offshore Rigs Is a Work in Progress, The New York Times, viewed 21 September 2017, https://www.nytimes.com/2011/04/17/us/politics/17regulate.html?pagewanted=all&_r=0
BP Plc 2014, Annual report and accounts 2014, viewed 21 September 2017, https://www.bp.com/content/dam/bp country/de_de/PDFs/brochures/BP_Annual_Report_and_Form_20F_2014.pdf
BP Plc 2012, Annual report and accounts 2014, viewed 21 September 2017, https://www.bp.com/content/dam/bp/pdf/investors/bp-annual-report-and-form-20f-2012.pdf
CBS Chicago 2013, BP Settles Class-Action Lawsuit Over Tainted Gasoline, CBS Chicago, viewed 21 September 2017, https://chicago.cbslocal.com/2013/08/21/bp-settles-class-action-lawsuit-over-tainted-gasoline/
Cleveland, C. J 2010, Deepwater Horizon Oil Spill, viewed 21 September 2017, https://www.eoearth.org/article/Deepwater_Horizon_oil_spill?topic=50364.
Cherry, M.A & Sneirson, J.F 2010, ‘Beyond Profit: Rethinking Corporate Social Responsibility and Green washing after the BP Oil Disaster’, Tulane Law Review, vol. 85, no.4, pp. 983-1038
Fodor, A & Stowe, J.D 2010, The BP Oil Disaster: Stock and Option Market Reactions, Working Paper, Ohio University.
Jefferson, J & Bowling, N 2011, The Economic and Biological Impacts of The BP Oil Spill, NDS 372.01 Environmental Studies Capstone Seminar.
Jacobson, M 2013, By the Numbers: The Oil Spill and BP’s Legal Troubles, PBS News Hour, viewed 21 September 2017, https://www.pbs.org/newshour/rundown/2013/07/gulf-oil-spill-by-the-numbers.html.
Mason, J.R 2010, The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region, Working Paper :Louisiana State University.
Upton, H.F 2011, The Deepwater Horizon Oil Spill and the Gulf of Mexico Fishing Industry,
A look at Europe’s Financial Crisis, viewed 21 September 2017, https://hosted.ap.org/specials/interactives/_business/greece_imf/content.swf.
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