Suncor Energy Business

Suncor Energy

Commerce 4AD3

March 31 2015

Time Budget

        Refer to Exhibit 1 for an in-depth, subcategorized allocation of time for this report.

Business Description and Understanding

        The purpose of understanding Suncor’s business is to improve our insight on transactions and the activities performed that affect our client’s financial statements.  This practise is essential when conducting an audit as it confirms our independence from Suncor. This procedure not only helps us analyze management assertions but also emphasizes areas such as the accounting principles and the accounting estimates applied by Suncor’s management.

Suncor Energy is a public energy company based in Alberta, which specializes in production of synthetic crude from its oil sands operations (Suncor, 2015). It also provides products derived from natural gas, and wind-generated electricity (Suncor, 2015). In order to obtain an understanding of the business, it is crucial to establish Suncor’s position relative to its competitors and analyze the industry conditions. Along with high demand in Canada’s energy industry, Suncor holds the largest position in the development of oil sands (Suncor, 2015).  It was the first company to undertake oil sand development, creating an industry that is now considered critical for Canada’s growth (Suncor, 2015). Suncor’s senior executive management team consists of a President or CEO, Executive Vice President, Senior Vice President, the Board of Directors of 14 independents, and various other involved groups (the Human Resources and Compensation Committee and the Audit Committee) (Suncor, 2015). Suncor’s upcoming projects will employ increased technological innovation, which will result in lower costs and decreased greenhouse gas emissions (Suncor, 2015). Forward-looking statements that integrate Suncor’s business strategies and goals include the investment of over $1 billion to implement its new Tailings Reduction Operations system (TROTM), improved development of renewable energy resources, and an expansion of its oil sands production capacity by 10% to 12% per year until 2020 (Suncor, 2015). As an oil company, Suncor is vulnerable to constant scrutiny due to numerous externalities, which can be outlined using the PEST analysis. Suncor’s Standards of Business and Conduct Code comply with the Canadian laws concerning the environment, and all domestic and international labour standards are honoured (Suncor, 2015). Furthermore, limits enforced by legislation require approvals or permits from a regulatory authority (Suncor, 2014). Suncor’s operations are examined for failures in safety or environmental alertness, which could violate approvals. The regulatory nature of this industry reflects Suncor’s business risk. Economic factors Suncor focuses on are increases in earnings per share, reductions in cash operating costs, and increases in share price (Suncor, 2014). Social factors act upon Suncor in that its success may hinge upon an understanding of the varying perspectives of employees, stakeholders, and Aboriginal neighbours (Suncor, 2011). Technological factors acting upon Suncor are its goals for higher productivity and lower costs while reducing its environmental footprint (Suncor, 2013). The users of Suncor’s financial statements, including employees, citizens, Aboriginals, regulators, non-governmental organizations, customers, and suppliers, must be considered when conducting the audit (Suncor, 2011).