Oil and Gas Royalty Collections--Longstanding Problems Costing Millions
AFMD-82-6
Published: Oct 29, 1981. Publicly Released: Nov 04, 1981.
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Highlights
GAO reviewed the U.S. Geological Survey's (USGS) continued unsuccessful efforts to collect oil and gas royalties on federal and Indian lands and the serious impact of this problem on the collection of the windfall profit tax.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Interior | To ensure that development of the new royalty accounting system is given high priority and sustained effort, the Secretary of the Interior should closely monitor the work to see that the system is properly implemented. In this regard, immediate attention must be given to determining how the production phase will operate and how it will interface with the accounting phase which is currently being designed. Also, in developing the accounting phase, USGS must acquire data on the number of leases and wells for which it is responsible and provide for verification of the royalty computation. The necessary resources must be provided and milestones must be strictly adhered to. |
A new review has been initiated to look at alternatives for royalty collection. This new review will take a look at current procedures and make appropriate recommendations, which will supersede this recommendation.
|
| U.S. Geological Survey | To ensure that development of the new royalty accounting system is given high priority and sustained effort, the Secretary of the Interior should closely monitor the work to see that the system is properly implemented. In this regard, immediate attention must be given to determining how the production phase will operate and how it will interface with the accounting phase which is currently being designed. Also, in developing the accounting phase, USGS must acquire data on the number of leases and wells for which it is responsible and provide for verification of the royalty computation. The necessary resources must be provided and milestones must be strictly adhered to. |
A new review has been initiated to look at alternatives for royalty collection. This new review will take a look at current procedures and make appropriate recommendations, which will supersede this recommendation.
|
| Department of the Interior | To gain control over information reported by the oil and gas companies, the Secretary of the Interior should direct USGS to include in its current redesign effort a plan which should provide for: (1) establishment of a detailed audit plan for periodic reviews of lease accounts and oil and gas companies' accounting records; (2) devotion of additional resources to the inspection of leases using field inspectors to help verify data reported; (3) coordination with the states to arrange the sharing of the audit and lease inspection function and the exchange of production and sales information; (4) reconciliation of existing lease account records to the extent possible; (5) identification of staff needs and resources for assessing interest on late payments; and (6) faster deposit of royalty payments using electronic funds transfer when possible. |
A new review has been initiated to look at alternatives for royalty collection. This new review will take a look at current procedures and make appropriate recommendations, which will supersede this recommendation.
|
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Topics
Collection proceduresCrude oilFederal agency accounting systemsFinancial managementIndian landsNatural gasProgram managementPublic landsRoyalty paymentsSystems design