Support businesses take the mine's compliance requirements and the mine's payment terms, and rarely the mine's margin. The financial questions that follow from that are specific enough that a general audit approach misses most of them.
The contract is the accounting
Rates, escalation clauses, mobilisation and demobilisation, standby, retentions, and what happens when the operator suspends. Revenue recognition follows the contract terms rather than the invoice date, and where a contract has run for two years without anybody reading it against the ledger, the two have usually drifted.
Cost recovery is where the margin leaks
Reimbursable costs not claimed within the contractual window. Escalation not applied because nobody triggered it. Standby time worked and never billed. Fuel and consumables charged to the wrong contract. Individually small, cumulatively the difference between a profitable contract and one that funds itself.
The currency mismatch
Contracts denominated in dollars, costs incurred in cedis, and payment terms of sixty days or more. That is a foreign exchange exposure carried without a hedge in most of the businesses we see, and it is rarely modelled until a movement makes it obvious.
Compliance flowed down to you
Local content obligations under the mining regulations sit with the operator, and the operator passes evidence requirements down the chain. Registration, Ghanaian ownership and employment thresholds, and procurement reporting become your obligations by contract. Failing them is a contractual problem before it is a regulatory one.
Where revenue recognition and most disputes actually sit
Withholding on works and on services, applied by your customer
The exposure most support businesses carry unhedged
Findings
What we find in mining support businesses
Consistent enough across the sector that we now test for them specifically rather than waiting for them to surface.
- Retention balances never chased, some past their contractual release date
- Reimbursable costs outside the claim window and now unrecoverable
- Escalation clauses never triggered because nobody diarised them
- Revenue recognised on invoicing rather than on the contract terms
- Equipment leases not assessed under IFRS 16, so the balance sheet understates
- Fuel and consumables allocated to the wrong contract, distorting contract margin
- Foreign currency contracts with no view on the exposure being carried
- Subcontractor withholding applied at the services rate when works applies
Services
What mining support clients use us for
Usually the audit first, then the contract and cost work once the first management letter has been read.
Statutory audit
Contract accounting, retentions and revenue recognition tested against the terms rather than the invoices.
Explore →Internal controls review
Cost allocation between contracts, procurement authority and the claim process for reimbursables.
Explore →Corporate tax compliance
Capital allowances on plant and equipment, and the interaction with contract timing.
Explore →Business strategy
Contract profitability by customer, and whether the current mix is worth having.
Explore →Questions
Questions from mining support businesses
Our operator requires audited accounts to a fixed date. Can you meet it?
How should retentions be treated?
Do the mining local content rules apply to us directly?
We invoice in dollars but pay costs in cedis. How should that be handled?
Next step
Send us a live contract and your last management accounts.
Those two documents together tell us more about a mining support business than anything else, and they are enough for a proposal.