Governments need to account for and report on their financial commitments, including those under PPP contracts. When reporting is done well, it encourages the government to scrutinize its own fiscal position. Making financial reports publicly available enables other interested parties-such as lenders, rating agencies, and the public-to reach an informed opinion on the government's public financial management performance.
Box 2.9: Types of Government Financial Reporting briefly describes the three types of government financial accounting and reporting-government financial statistics, government financial statements, and budget documentation and reporting-and the relevant internationally-recognized standards and guidelines that apply in each case. In general, these standards set rules or guidelines for whether and how different kinds of liabilities and expenditures should be recognized-that is, formally recorded in the financial statements and statistics, or disclosed-that is, reported in notes or narratives. This section briefly describes how these standards apply to PPPs, with some examples of how different countries have interpreted them in practice.
Box 2.9: Types of Government Financial Reporting Most governments capture and report financial information in three related frameworks: • Government finance statistics-these are summary statistics on the state of a government's finances, which are intended to be internationally comparable. These statistics may follow regional or international standards, such as those set by Eurostat for European Union countries, or the IMF's Government Finance Statistics Manual (GFSM) published in 2001 but with regular updates since that date [#156] • Government financial statements-most governments also publish audited financial statements. There are internationally-recognized standards on what should be in those financial statements, although in practice few governments meet those standards. The International Public Sector Accounting Standards (IPSAS, [#153]) is a modified version of the International Financial Reporting Standards (IFRS). IPSAS is designed for use in the public sector, while IFRS applies to companies. Some governments adopt local accounting standards that are a simplified version of the IPSAS standards • Budget documentation and reporting-most governments prepare reports on financial performance as part of budget preparation and reporting. These are not subject to any international standards, although there are international guidance materials that promote transparency-for example, the IMF's Manual on Fiscal Transparency (2007) [#157] and the OECD's Best Practices for Budget Transparency (2002) [#191]. |
Helpful overview resources on reporting and accounting for PPPs include:
• Funke, Irwin, and Rial's paper on budgeting and reporting for PPPs includes a section on accounting for and reporting PPP transactions, which describes in detail the implications of accounting standards and statistical standards for PPPs [#108, pages 9-19]
• Part 4: PPP Accounting, Reporting, and Auditing in the collection of articles published by the IMF on Public Investment and Private Partnerships [#214]
• An OECD report on PPPs, value for money, and fiscal risk, which includes a section on budget scoring and accounting treatment of PPPs [#39, pages 90-105]
• Cebotari's report on contingent liabilities, which includes a section on disclosing contingent liabilities [#44, pages 32-41], with practical examples of different countries' approaches, and an annex on the relevant international standards.