25. This paper sets out our conclusions on how to account for PPP arrangements, including PFI contracts. Where a PPP arrangement meets the definition of a service concession arrangement within the meaning of IFRIC 12, the public sector grantor should report that infrastructure asset on its balance sheet, separating out the interest and service charge elements of the contractual payments where this is possible. Normally, this would mean that the operator would not recognise the infrastructure asset because, from its viewpoint, the two conditions in paragraph 7 above (paragraph 5 of IFRIC 12) are met
26. A separate accounting assessment of the contract might be needed for National Accounts purposes under the risks and rewards approach in IAS 17. Reporting entities are requested to consider whether this assessment would differ from that under the proposed approach and whether this would impose significant additional burdens. Examples of key projects where the treatment would be different should be provided.
HM Treasury
December 2007