Accounting Treatment

This Part of the Procurement Pack provides guidance to local authorities on how to address the accounting treatment of PFI schemes.

Local authorities prepare their accounts in accordance with the Code of Practice on Local Authority Accounting: A Statement of Recommended Practice ('the SORP'). The SORP involves interpretations of accounting standards and other pronouncements by the Accounting Standards Board (ASB) including FRS5 Reporting the Substance of Transactions Application Note F - PFI and Similar Contracts which was published on 10 September 1998.

Treasury issued Technical Note No. 1 (Revised) - How to Account for PFI Transactions ('the Technical Note') in July 1999. The SORP states that 'the status of the Technical Note for local authorities is that they are not within its scope, but practitioners might find its contents of interest in informing their consideration of the SORP's requirements derived from FRS5 to account for the substance of a transaction rather than its form.'