TOTAL

ABOUT THE COMPANY

TOTAL is an international oil and gas company also involved in chemicals and new energies. TOTAL is the fifth largest publicly traded international oil and gas company in the world. It employs nearly 100,000 people in over 130 countries. In 2012 alone it saw sales of over 200 billion Euro. It first began drilling in the middle-east but now has production of oil and gas in 30 different countries. Its drilling activities produce about 2.3 million barrels of oil per day supplying 14,725 service stations.
TOTAL is organized into three business segments: Upstream, Refining and Chemicals and Marketing and Services. Upstream includes oil exploration and production as well as activities involving natural gas and new energies such as solar power and biomass. Refining and Chemicals compromises refining, petrochemicals, base chemicals, fertilizer, specialty chemicals and oil and gas trading and shipping activities. Marketing and Services covers the supply and marketing of petroleum products as well as new energies.

TOTAL’S APPROACH
TOTAL’s financial statements are presented in EUROS and have been prepared on the basis of International Financial Reporting Standards. TOTAL’s financial reporting is in complete accordance with IFRS accounting standards in nearly all aspects of its financial statements. There are also a few accounting maneuvers conducted by TOTAL that have yet to be covered by IFRS. The following are a few ways they are in accordance with IFRS as well as two accounting assumptions made by TOTAL. In accordance with IFRS TOTAL’s management has to make estimates that affect the reported amounts of assets, liabilities and contingent liabilities at the date of preparation of the financial statements and reported income and expenses for the period. Management of TOTAL has to review these estimates continuously to form the basis of the carrying amount of assets and liabilities in compliance with IFRS. Management states that actual liabilities may be significantly different from these estimates noting that different circumstances may apply. It seems measuring oil and gas production on such a wide scale is extremely difficult. This quote from TOTAL’s management looks to address any discrepancies.
“These judgments and estimates relate principally to the application of the successful efforts method for the oil and gas accounting, the valuation of long-lived assets, the provisions for asset retirement obligations and environmental remediation, the pensions and post-retirements benefits and the income tax computation. “-Total.com
TOTAL again operates in 130 countries around the world, and thus collects many different forms of currency. Financial transactions using currency other than currency of that entity are translated into Euros using the exchange rate on the date of the transaction. At each balance sheet date, monetary assets and liabilities are translated at the closing rate and the resulting exchange differences are recognized in the statement of income. Assets and liabilities of foreign entities are translated into euros on the basis of the exchange rates at the end of the period. Then the income and cash flow statements are converted using the average exchange rates for the period in accordance with IFRS.
TOTAL’s revenues from sales are recognized when significant risks are minimized and the recognition of ownership has been passed onto the buyer and the amount can be easily measured as in accordance with IFRS.
TOTAL applies its own interpretation of how they assume they should report things that are absent from current IFRS Standards. Emissions trading is an approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
Governments set limits on the amount of a pollutant, in this case carbon, that may be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of the specified pollutant. Companies are required to hold a number of permits equivalent to their emissions. (www.Wikipedia.com) TOTAL manages their emission rights as a cost of production and recognizes them in their inventories. If emission rights are acquired for free their booked as an inventory at a 0 carrying amount. The purchased emission rights are booked at the cost of the purchase and sale of those permits are listed as a decrease in inventory. If the carrying amount of inventories at the closing date is higher than market value an impairment loss is then recorded. Energy Savings Certificates (ESC’s) are equivalent to 1 ton of carbon dioxide. An accredited provider would be able to create such a certificate for each ton of carbon dioxide saved. These certificates can be traded and sold to other entities which may have an obligation to meet a predetermined energy savings quota. In the absence of IFRS accounting standards concerning these certificates TOTAL takes the following steps to record such transactions. In the event that the number of ESC’s held exceeds the obligation at the date of the balance sheet then these are recorded as inventory. These ESC’s are valued at the weighted average acquisition cost or the cost incurred to generate those ESC’s internally.
CONSOLIDATED FINANCIAL STATEMENTS