[Code of Federal Regulations]
[Title 30, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 30CFR220.033]

[Page 203-204]
 
                       TITLE 30--MINERAL RESOURCES
 
                       DEPARTMENT OF THE INTERIOR
 
PART 220--ACCOUNTING PROCEDURES FOR DETERMINING NET PROFIT SHARE PAYMENT FOR OUTER CONTINENTAL SHELF OIL AND GAS LEASES--Table of Contents
 
Sec. 220.033  Audits.

    (a) The accounts of an NPSL lessee or of a contractor of the lessee 
which are related to NPSL operations shall be subject to audit by DOI or 
its appointed agent. Where possible, the auditor for DOI shall 
coordinate audit efforts with other nonoperators, if any. DOI shall have 
the right to initiate an audit any time within thirty-six months of the 
due date of the monthly statement that is to be audited or the date that 
the statement was mailed, whichever is later, provided, however, that 
audits may not be conducted any more frequently than once every year

[[Page 204]]

except upon a showing of fraud or willful misrepresentation.
    (b)(1) When nonoperators of an NPSL lease call an audit in 
accordance with the terms of their operating agreement, the Director 
shall be notified of the audit call in the same manner as the operator 
is notified. DOI may elect to send an auditor with the audit team 
specified by the nonoperators in lieu of calling for a separate audit by 
DOI.
    (2) If DOI determines to call for an audit, DOI shall notify the 
lessee of its audit call and set a time and place for the audit. Such a 
notice shall be sent at least thirty days before the suggested time for 
the audit to allow the nonoperators to join in DOI's audit in lieu of 
calling for their own audit. The place for the audit will normally be 
the place where the lessee maintains its records pertaining to the NPSL 
lease. The lessee shall send copies of the notice to the nonoperators on 
the lease. The lessee shall use reasonable effort to notify all 
nonoperators, but failure to include one or more nonoperators in the 
notification shall not void the notice.
    (3) When DOI calls for an audit, DOI may suggest the date and time 
when the audit may commence. The estimated duration of the audit may be 
mentioned to the lessee as well as to the other nonoperators who may 
elect to supply and auditor for their own audit purposes. The lessee's 
office where the audit will be held may be named or, if not known, 
inquired about. If a visit to a field plant or field office is 
contemplated by the government auditor, such a field trip may be 
mentioned. If DOI expresses a desire to review a period on which the 
thirty-six month time limitation has expired, it is the lessee's 
prerogative to allow the review or to request that DOI adhere to the 
time limitation specified in these regulations.
    (c)(1) Exceptions to the accounting by the lessee, whether in favor 
of the government or the lessee, shall be noted in a report to the 
lessee. The lessee shall have 60 days from the mailing of a notice of 
exceptions to agree to the adjustments proposed by the DOI auditor or to 
object to the proposed adjustments. If the lessee accepts the proposed 
adjustments, the adjustment shall be booked in the month in which the 
lessee agrees to the adjustment, except where such adjustment would have 
resulted in a change in any net profit share payment due the United 
States. In such a case, there shall be a redetermination of the NPSL 
capital account pursuant to Sec. 220.034.
    (2) If the lessee disagrees with the adjustment, the lessee shall 
have the right to appeal the adjustment to the Director.
    (d) Upon receipt of an agreement by the government auditor that 
there are no required audit adjustments, upon final determination with 
respect to any audit adjustment proposed by the government auditor, or 
upon the lapse of thirty-six months from the due date or date of mailing 
of the statement of account on an NPSL lease, whichever comes later, the 
books shall be closed for audit adjustment purposes, except upon a 
showing of fraud or willful misrepresentation.
    (e) Records required to be kept under Sec. 220.030(a) shall be made 
available for inspection by any authorized agent of DOI at any time 
during normal business hours upon the request of the Director or other 
authorized official.