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See: Investors for Paris Compliance, Accounting for the Canadian Oil & Gas Liabilities Gap (November 2025).

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Auditor General explains issues with the official estimate

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Overstated asset values prevent security collection

  • When the value of an asset decreases to less than 3x its liability, closure costs must be paid
  • BUT operators are overvaluing assets to avoid triggering the requirement to start paying
  • Operators appear financially healthier than they may actually be, and are kicking their closure costs down the road

Source: Auditor General of Alberta, Mine Financial Security Program Assessment of Implementation (2025).

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Real world example

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Source: University of Calgary Faculty of Law, The 2025 Mine Financial Security Program Update: Security Collected for Aging Syncrude Mine Offers a First Estimate of Mine Closure Costs (October 2025).

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Source: Investors for Paris Compliance, Accounting for the Canadian Oil & Gas Liabilities Gap (November 2025).

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Role of the auditor

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“If climate change impacts the entity, the auditor needs to consider whether the financial statements appropriately reflect this in accordance with the applicable financial reporting framework (i.e., in the context of risks of material misstatement related to amounts and disclosures that may be affected depending on the fact and circumstances of the entity).”

Source: IAASB, The Consideration of Climate-Related Risks in an Audit of Financial Statement. (October 2020).

Source: Deloitte, Independent auditor’s report to the members of EnQuest PLC (2023).

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Source: Investors for Paris Compliance, Accounting for the Canadian Oil & Gas Liabilities Gap (November 2025).

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I4PC Recommendations to audit committees

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  1. Provide details behind critical assumptions: Explain how accounting judgments include relevant risks, available data, transition scenarios. If not aligned with energy transition scenarios, explain why.

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  • Provide a sensitivity analysis: Quantitative disclosure of how company’s financial position would change under faster transition scenarios with higher decommissioning costs.

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  • Ensure consistency: Management’s discussion of the potential impacts of energy transition risks should be reflected in financials.

See: Investors for Paris Compliance, Canadian oil & gas producers on notice: liabilities accounting to be an AGM voting issue (January 2026).