Responsible Agencies are required to prepare and update an accounting and budget paper, including the FIS Table (see Appendix 2) at each project milestone (as shown in Figure 4.1 and the INSW Assurance Gateway Process), when and if new project information would result in significant changes to the accounting or budget treatment.
The accounting and budget paper must be consistent with all Australian Accounting Standards (AASBs). In many instances, PPPs would be accounted for under AASB 1059 Service Concession Arrangements: Grantors. However, some PPPs may not fall within the scope of AASB 1059 and other accounting standards could apply e.g. AASB 16 Leases or AASB 116 Property, Plant and Equipment.
NSW Treasury's Accounting Policy branch is responsible for accounting policies and guidelines. The Responsible Agency is required to follow all policies and guidance published by NSW Treasury's Accounting Policy branch. In particular, the policies and guidance on the AASB 1059 webpage1 are relevant to PPPs including TPP19-06: AASB 1059 Service Concession Arrangements: Grantors - Scoping.
The Responsible Agency is required to consult with NSW Treasury to assess the requirements of AASB 1059 and form an accounting position for all PPPs at each project milestone.
The accounting and budget paper must identify the following items as minimum requirements:
• A summary of application of relevant accounting standards, policies and guidelines.
• Balance sheet, income statement and cash flow impacts over the life of the PPP project.
• Budget result impacts, total net lending impacts, net debt impact and capital and recurring expenditures in accordance with the FIS Table (see Appendix 2).
• Estimated full contingent exposure to the NSW Government, including the:
- Possible termination liability, in the case of private party default or voluntary termination by the NSW Government; and
- Sum of any individual actual or contingent liabilities under specific clauses of the project delivery contract, combined with the probability of each outcome.
• The impact of key assumptions including CDPD, State Capital Contribution and grantor's financing costs.
• Adjustments for forthcoming likely new accounting standards, as appropriate from the Responsible Agency's perspective, General Government Sector, and Total State Sector perspective.
To the extent that the Responsible Agency's Availability PPP is subject to floating interest rate adjustments, the Responsible Agency will need to seek approval for the corresponding budget adjustments through the Budget Process.
Responsible Agencies should consult with NSW Treasury to agree on the accounting treatment and budget impacts for all PPP transactions at each project milestone. In addition, the CFO of Responsible Agencies is required to confirm that the information contained in the accounting and budget paper including the FIS Table is complete and accurate for all Cabinet submissions. NSW Treasury recommends the Responsible Agency allows sufficient time, particularly in the lead up to contract close, to prepare the FIS Table due to the level of complexity and coordination required of stakeholders.
The Auditor-General will ultimately be issuing to Parliament an audit opinion on the financial statements of the Responsible Agency and the whole-of-Government accounts. These audits include considerations of the accounting treatment for any PPPs. In some cases, the views of the Audit Office may differ from NSW Treasury's view. Responsible Agencies should therefore keep the Audit Office updated on the proposed accounting treatment for a PPP project, especially if there are unique aspects to the transaction.
NSW Treasury issues an annual Treasury Circular on early close reporting procedures (for example, TPG22-11: Agency Direction for the 2021-22 Mandatory Early Close2, which requires accounting treatment of significant and complex transactions to be resolved at an early stage. Responsible Agencies are required to comply with this Circular. For further information, Responsible Agency should consult with NSW Treasury for guidance on specific information relating to accounting policies.
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1 Refer to https://www.treasury.nsw.gov.au/information-public-entities/accounting-policy.
2 Up to date at the time of publication of these Guidelines. Refer also to Treasurer's Direction on Mandatory Early Close as at 31 March each year (TD19-02).