個案總覽

A leading Canadian mining company had recently closed two uranium mines and begun the lengthy and complex regulatory process to obtain approval of their clean-up plans for the mine, surface facilities and waste management areas. The accounting issues in the case focus on the uncertainty associated with the approval of a specific waste management method, upon which the company had based its provisions for clean-up costs, and the potential cost associated with alternative waste management methods that had been investigated by an independent consultant. If forced to adopt one of the alternative methods, a potential cost and liability of $300 million could result. In the audit committee meeting a concern is raised about the potential existence of a contingent liability. The decision faced by the audit committee is whether to investigate the situation, and if so, its role and how to proceed. (Two sequels to this case, titled Northern Mines Limited (B), case 9A98B013 and Northern Mines Limited (C), case 9A98B014 describe the audit committee's investigation and recommendations.)

A leading Canadian mining company had recently closed two uranium mines and begun the lengthy and complex regulatory process to obtain approval of their clean-up plans for the mine, surface facilities and waste management areas. Northern Mines (B) summarizes the investigation that was carried out by the audit committee, and the information that is gathered from the auditors and management about the regulatory process for decommissioning and the company's proposed clean-up methods. Now the audit committee members must decide if a contingent liability exists, and if so, what to recommend to the board about disclosure. (This is a sequel to Northern Mines Limited (A), case 9A98B012.)