In 2010, one of BP PLC’s offshore oil rigs ruptured, causing a massive oil spill into the Gulf of Mexico. The spill continued for months, causing great damage to both the environment and BP PLC’s financial outlook. Aside from the loss of product and manpower, BP PLC’s reputation suffered an enormous blow.
If you are unfamiliar with the Deepwater Horizon Oil Spill, perform some independent research using the Internet. With this event in mind, discuss the following questions related to BP PLC:
Write at least 200 words answering the following questions:
What internal controls would be important to BP PLC, and why?
Is there evidence that there was a breech on internal controls at the time of the Deepwater Horizon disaster?
Were contingencies planned for related to the Deepwater Horizon explosion?
What impact might the Deepwater Horizon Oil Spill have on BP PLC’s financials over the next 3 – 5 years?
Specifically, how might this oil spill and its aftermath be accounted for in the liability section of BP PLC’s balance sheet and how might this affect related financial ratios?
Discuss which contingencies are likely to be accounted for in the short-run versus the long-term.