Systrends recently attended the Liquid Energy Pipeline Association’s 2023 Annual Business Conference in Minneapolis where we engaged with over 200 attendees on regulatory, tariff, and accounting matters. Oil pipelines play a critical role in our infrastructure, delivering an affordable, secure, and abundant source of energy. Meeting, reconnecting with, and learning from so many industry leaders was both informative and motivating as we seek to deliver the industry’s leading FERC reporting solutions.
Let’s dive into a few of our takeaways!
FERC accounting standards are unique for oil pipelines
The Federal Energy Regulatory Commission (FERC) requires that oil pipeline companies submit financial statements based upon the Uniform System of Accounts (“USofA”), as opposed to Generally Accepted Accounting Principles (“GAAP”). These standards aim to provide accounting information in a manner that assists the FERC in their regulatory efforts. The standards differ from GAAP in their treatment of business combinations, equity investments, capitalization thresholds, depreciation, and more. This ultimately requires accounting departments within oil pipelines to maintain distinct sets of books for Form 6, Page 700, GAAP, and income taxes, which introduces significant operational complexity.
Rigorous compliance programs maintain meticulous records
18 CFR §352 of the Interstate Commerce Act of 1887, which documents the provisions of the USofA, outlines clear record retention rules. Perhaps the most burdensome is the requirement to preserve all property records for at least three (3) years after disposition of the property. Beyond record retention, however, it is critical that regulatory compliance professionals can provide evidence for and justify figures reported within Form 6 and on Page 700. Best-in-class software allows users to cite the source of information to ensure accurate reporting and efficient review.
FERC audits reinforce importance of tariff maintenance
The FERC’s Department of Enforcement is home to audit branches that routinely audit the Rules & Regulations tariff of oil pipelines. The audits are comprehensive and typically review the prior 2-3 years of operations. Many recent audits have focused on allocation practices, particularly when carriers have an opportunity to exercise its discretion. In addition to retaining clear records over time, your FERC compliance team should compare the pipeline’s tariff to day-to-day business practices on a regular basis to ensure the two align.
LEPA’s 2023 Annual Business Conference highlighted the critical role that reliable, efficient, and intuitive software plays in the day-to-day of regulatory compliance professionals across the oil pipeline industry. At Systrends, we understand the challenges oil pipelines face when complying with the FERC and aim to provide industry-leading electronic filing software that streamlines reporting and audit compliance.