The continued use of the results of the accounting treatment of PPPs for statistical (i.e. Eurostat) purposes is being challenged by changes to the guidance on the accounting for service concessions produced by the International Accounting Standards Board (IASB).
The argument for a new accounting standard has focused on the differences and novelty of PPP transactions, as well as on the lack of clear accounting guidance for these transactions. Surrogate standards, such as "in-substance leases" were considered too rigid to reflect the substance of PPPs. A number of other factors have been put forward to justify the introduction of a new standard, such as:
• the lack of certainty for both the public and private partners in PPP transactions often leading to arbitrage in the reporting;
• the frequency of changes introduced into PPP contracts in development -normally at a late stage - to meet accounting (and statistical) requirements; and
• the distortion of commercial incentives brought in PPP transactions to respond to accounting imperatives.