Oil, Gas Industry’s Accounting ‘Loophole’ Frustrates Investors

Oil and gas companies are using a gap in US financial reporting rules to omit from their balance sheets hefty obligations to clean up retired refineries and pipelines, climate and investor advocates say.

Under existing guidance, companies leave off these liabilities by citing uncertainty over when the assets will be shuttered, according to groups like the Climate Accounting and Audit Project.

The groups are pushing the Financial Accounting Standards Board to close this “loophole,” which they say limits investor insight into a company’s financial position. The board will meet on Oct. 8 to discuss its next priorities.

Asset retirement obligations, ...