In the past, National Accounts followed the UK GAAP compliant Resource Accounts, as UK GAAP was considered to be broadly consistent with ESA951 and MGDD2. IFRIC 12, the IFRS standard that addresses PFI service concessions, will result in most PFI projects coming on to Department's balance sheets for Resource Accounts purposes. However, ESA95 remains unchanged and, as such, there is an inconsistency between how PFI contracts are accounted for in Resource Accounts and how they should be accounted for in the National Accounts.
This paper describes, for simple cases, the tests that should be applied by Departments in determining whether or not PFI projects are on balance sheet for National Accounts purposes. The paper only addresses Service Concession arrangements (as defined by IFRIC 12); it does not cover leases nor does it cover user-pays arrangements. This paper should be read in conjunction with the technical guidance where a PFI project is not wholly addressed here.
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1 European System of Accounts 1995 (ESA95) - The European rules that dictate how member states should prepare their national accounts to ensure consistency of preparation across the EU.
2 The Manual for Government Deficit and Debt (MGDD) - The document that further clarifies the ESA95 guidance.