Public-sector institutions should follow generally accepted accounting principles (GAAP) or the standards set by the Public Sector Accounting Board (PSAB), where appropriate, when classifying infrastructure-related expenditures for budgeting, accounting and financial statement reporting. Following GAAP or PSAB will provide the public and stakeholders with better information related to value of infrastructure assets and the revenue or benefit they generate, and will more fairly allocate the costs associated with creating the infrastructure assets across generations of users.
The figure below outlines the major types of infrastructure expenditure covered by the Infrastructure Planning, Financing and Procurement Framework and the typical accounting treatment for each:
Figure 1.1 Accounting Treatment by Investment Classification
| Investment Classification | Description | Accounting Treatment Guidelines |
| Maintenance | Maintenance includes the costs of maintaining assets for their intended purpose and service life, and repairs that do not prolong an asset's original life expectancy. | Infrastructure asset-related expenditures that are considered maintenance expenditures should be expensed. |
| Deferred Maintenance | Deferred maintenance refers to the accumulated value of normally required maintenance investments that have been deferred from prior years. This amount should reflect the amount of investment required to bring the asset into normal operating condition at the beginning of the period (i.e., excluding current-year maintenance investment) to the extent possible. | If the deferred maintenance meets the criteria for rehabilitation and refurbishment, expenditures may be capitalized. If the deferred maintenance meets the criteria for maintenance, expenditures should be expensed. |
| Rehabilitation and Refurbishment | Rehabilitation and refurbishment are those initiatives that result in any of the following material changes to an existing asset: • increased physical output or service capacity; • lower operating costs; • extended life; or • improved output quality. | Expenditures on rehabilitation and refurbishment initiatives may be capitalized. |
| Renewal and New Infrastructure Assets | Construction of new assets or the replacement of existing assets. | All direct acquisition, construction and/or development costs related to new infrastructure assets may be capitalized and amortized. |
Public-sector institutions with specific questions regarding accounting treatment should consult their accounting professionals.