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Upstream: Enterprise Risk

A privately held global financial services firm was considering extending additional debt to one of the oil and gas exploration and production (E&P) companies in its investment portfolio. Headquartered in Knoxville, Tennessee, the E&P Company focuses its operations in Cook Inlet, Alaska and the Appalachian Basin and offers common stock on the New York Stock Exchange. The financial services firm initially engaged Opportune to assess the quality of earnings of the E&P company by performing limited procedures similar to due diligence projects.

Upon completion of the initial assessment, Opportune recognized several substantial risks related to the Accounting and Finance groups at the E&P Company - the groups were understaffed and lacked the appropriate experience and capacity to maintain strict internal controls necessary for a public company. Due to the lack of resources, the E&P Company filed numerous restatements with the Securities and Exchange Commission (SEC) and management was uncertain about the company's internal controls over financial reporting were in compliances with the Sarbanes-Oxley Act of 2002 (SOX). Per the financial services firm's recommendation, the E&P Company's management hired Opportune to guide it through the preparation of its quarterly (10-Q) and annual (10-K) financial statements filed with the SEC, in addition to assisting the Accounting and Finance groups with technical accounting matters, such as derivatives instruments, stockholders equity, and taxes.

After two months of involvement with financial reporting, Opportune was further engaged to assist with the E&P Company with its SOX implementation and to serve as the company's Internal Audit department. As part of the SOX testing plan, Opportune enlisted the help of its Process and Technology group to test the IT General Computer Controls (ITGCC). Opportune worked closely with the E&P Company's third party IT outsourcing provider to ensure the ITGCC measures were implemented properly.

Opportune continues to support the E&P Company in several other areas including tax compliance, valuation, standardized measure of oil and gas disclosures, and most recently, asset retirement obligation disclosures.

Opportune offers experienced insight into internal compliance review processes and governance activities. Our risk management staff has been working with international energy-sector companies for nearly 40 years, and we have the industry-specific and financial acumen to reduce operational costs and risks while increasing competitive advantage. Our seasoned experience in risk analysis enables us to identify potential points of vulnerability, while our expertise in evaluating and testing policy and procedure documentation works to improve existing business processes. Opportune works closely with corporate management to ensure compliance is met and maintained without compromising efficiency and profitability. For additional information, click here.

Josh Sherman

PartnerOpportune LLP