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Questions and Answers
What percentage did the mining industry contribute to the national GDP of the Philippines in 2022?
What percentage did the mining industry contribute to the national GDP of the Philippines in 2022?
Which of the following minerals is NOT mentioned as a key mineral in the global mining industry?
Which of the following minerals is NOT mentioned as a key mineral in the global mining industry?
What role does the International Council on Mining and Metals (ICMM) attribute to the mining industry in the global economy?
What role does the International Council on Mining and Metals (ICMM) attribute to the mining industry in the global economy?
Which government body in the Philippines is involved in regulating mining operations?
Which government body in the Philippines is involved in regulating mining operations?
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What is a significant driver of demand for critical minerals such as lithium and cobalt?
What is a significant driver of demand for critical minerals such as lithium and cobalt?
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What recent trend has the Philippine government aimed for in the mining sector?
What recent trend has the Philippine government aimed for in the mining sector?
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Which of the following best describes the contribution of the mining industry to the global GDP?
Which of the following best describes the contribution of the mining industry to the global GDP?
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Why is the mining industry considered pivotal in the context of construction and manufacturing?
Why is the mining industry considered pivotal in the context of construction and manufacturing?
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What is the correct definition of impairment in the context of mining assets?
What is the correct definition of impairment in the context of mining assets?
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Which standard addresses the recognition and measurement of provisions in the mining sector?
Which standard addresses the recognition and measurement of provisions in the mining sector?
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What must mining companies regularly review to determine potential impairment?
What must mining companies regularly review to determine potential impairment?
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How is the recoverable amount of an asset determined in the mining industry?
How is the recoverable amount of an asset determined in the mining industry?
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What type of costs can certain exploration activities in mining be capitalized as?
What type of costs can certain exploration activities in mining be capitalized as?
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Which practice involves recognizing costs associated with rehabilitating mining sites post-operation?
Which practice involves recognizing costs associated with rehabilitating mining sites post-operation?
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What is a key characteristic of a provision according to PAS 37?
What is a key characteristic of a provision according to PAS 37?
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Under PAS 38, how are intangible assets recognized?
Under PAS 38, how are intangible assets recognized?
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What is the primary focus of local government ordinances regarding mining and forestry operations?
What is the primary focus of local government ordinances regarding mining and forestry operations?
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What must companies obtain from the DENR prior to initiating mining operations?
What must companies obtain from the DENR prior to initiating mining operations?
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What environmental risk is primarily associated with mining activities?
What environmental risk is primarily associated with mining activities?
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How do international agreements like the Kyoto Protocol impact forestry practices?
How do international agreements like the Kyoto Protocol impact forestry practices?
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What is one of the recommended techniques for crafting clear and concise reports?
What is one of the recommended techniques for crafting clear and concise reports?
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What is an example of a safety hazard faced by workers in the mining industry?
What is an example of a safety hazard faced by workers in the mining industry?
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Why is transparency important in environmental and sustainability reporting?
Why is transparency important in environmental and sustainability reporting?
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What is a potential challenge in asset valuation within the mining industry?
What is a potential challenge in asset valuation within the mining industry?
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How does the Global Reporting Initiative (GRI) assist organizations?
How does the Global Reporting Initiative (GRI) assist organizations?
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What type of fraud risk might a mining company experience?
What type of fraud risk might a mining company experience?
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Which of the following is a common safety regulation applicable to workers in mining?
Which of the following is a common safety regulation applicable to workers in mining?
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What can happen if a company lacks transparency in its reporting?
What can happen if a company lacks transparency in its reporting?
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What type of disclosures are required for environmentally sensitive industries like mining and forestry?
What type of disclosures are required for environmentally sensitive industries like mining and forestry?
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What plays a vital role in assessing the completeness and accuracy of disclosures?
What plays a vital role in assessing the completeness and accuracy of disclosures?
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Which of the following is NOT a goal of the banking and finance sector in the Philippine economy?
Which of the following is NOT a goal of the banking and finance sector in the Philippine economy?
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What impact do transparency issues have on companies like BP during environmental crises?
What impact do transparency issues have on companies like BP during environmental crises?
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What services do rural and cooperative banks primarily provide?
What services do rural and cooperative banks primarily provide?
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Which institutions oversee non-bank financial institutions in the Philippines?
Which institutions oversee non-bank financial institutions in the Philippines?
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Which of the following is NOT categorized as a non-bank financial institution?
Which of the following is NOT categorized as a non-bank financial institution?
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What role does the Bangko Sentral ng Pilipinas (BSP) play in the financial system?
What role does the Bangko Sentral ng Pilipinas (BSP) play in the financial system?
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How do rural and cooperative banks contribute to the rural economy?
How do rural and cooperative banks contribute to the rural economy?
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What trend is observed in the role of financial intermediation in the Philippine economy?
What trend is observed in the role of financial intermediation in the Philippine economy?
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Which type of service is typically offered by non-bank financial institutions?
Which type of service is typically offered by non-bank financial institutions?
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What is one of the functions of rural and cooperative banks in relation to farmers?
What is one of the functions of rural and cooperative banks in relation to farmers?
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Study Notes
Mining and Forestry Industry
- Global Context: The mining industry is a crucial contributor to the global economy, providing essential materials for various sectors. The ICMM estimates that mining contributes approximately $1.2 trillion to global GDP. Key minerals include gold, copper, coal, and rare earth elements.
- Philippine Context: The Philippines boasts abundant mineral resources, ranking among top producers of nickel, copper, and gold. In 2022, the mining industry contributed about 1.3% to national GDP. The government is actively involved in regulating mining operations through the Department of Environment and Natural Resources (DENR).
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Auditing Considerations:
- Depreciation: Assets are depreciated over their useful lives. Mining depreciation methods vary based on asset type (machinery vs. buildings).
- Impairment: Mining assets require regular impairment reviews, especially if indicators suggest the carrying amount may not be recoverable.
- PAS 36: Impairment of Assets: This standard outlines how to identify and measure asset impairment, including those in the mining sector, focusing on Cash-Generating Units (CGUs) and Recoverable Amount.
- PAS 37: Provisions, Contingent Liabilities, and Contingent Assets: This standard is vital for accounting for liabilities in the mining sector, particularly environmental rehabilitation, legal disputes, and contingencies.
- PAS 38: Intangible Assets: This standard covers licenses and exploration rights, with recognition at cost and potential amortization over their useful lives. Exploration costs can be capitalized as intangible assets if specific criteria are met.
- Local Government Ordinances: Local governments have ordinances governing mining and forestry within their jurisdictions, emphasizing community rights and environmental protection.
- Licensing and Permits for Mining Operations: Companies need various licenses, including Exploration Permits, Mineral Production Sharing Agreements (MPSA), and Environmental Compliance Certificates (ECC) from the DENR.
- International Agreements: International agreements, like the Kyoto Protocol, promote sustainable land use and reduce deforestation, requiring audits of environmental impacts and sustainable practices.
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Risks in the Mining Industry:
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Environmental and Safety Risks:
- Pollution: Environmental degradation includes water pollution, land degradation, and biodiversity loss.
- Safety Hazards: Occupational health risks to workers, such as exposure to hazardous materials and accidents, require compliance with safety regulations like OSHA in the US or similar regulations in the Philippines.
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Asset Valuation and Impairment:
- Fluctuating Commodity Prices: Fluctuating commodity prices impact asset valuation.
- Exploration Costs: Accounting for exploration costs and their recoverability poses challenges.
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Fraud Risks:
- Underreporting of Extracted Minerals: Manipulation of production data to evade taxes or regulatory scrutiny.
- Corruption Risks: Bribery and corruption in securing permits or contracts.
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Environmental and Safety Risks:
Financial Services Industry
- Overview: The banking and finance sector plays a crucial role in the Philippine economy, mobilizing domestic savings and converting them into productive investments.
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Types of Institutions:
- Banks: Accumulate savings and provide loans for housing, working capital, and medium-to-long-term financing for enterprises.
- Non-bank Financial Institutions: Include insurance companies, pension funds, investment banks, financing companies, pawnshops, and mutual funds.
- Bangko Sentral ng Pilipinas (BSP): The BSP is the independent central monetary authority responsible for regulating and overseeing banks and non-bank financial institutions.
- Role of Financial Intermediation: The role of financial intermediation in the Philippine economy is expanding, creating employment opportunities. The share of financial intermediation output in the service sector and gross domestic product has been increasing.
Reporting Practices
- Crafting Clear and Concise Reports: Techniques for clear and concise reporting include using plain language, logical organization, and summarizing key findings.
- Emphasizing Transparency in Environmental and Sustainability Reporting: Stakeholders demand greater transparency in sustainability practices and reporting, as lack of transparency can harm a company's reputation.
- Frameworks for Reporting: Global Reporting Initiative (GRI) provides guidelines for sustainability reporting, and auditors play a role in verifying these reports.
- Special Disclosures for Mining and Forestry in Financial Statements: Accounting standards and regulations necessitate disclosures related to environmental liabilities and sustainability practices. Examples include disclosures for asset impairment related to environmental issues and sustainable forestry practices.
- Auditor's Role in Assessing Disclosures: Auditors evaluate the completeness and accuracy of disclosures.
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Description
Explore the critical role of the mining industry in both global and Philippine economies. This quiz will cover key minerals, regulatory frameworks, and important auditing considerations such as depreciation and impairment. Understand how mining impacts GDP and the environment.
