Proposed guidance: Public-private and public-public partnerships
FINANCIAL REPORTING INSIGHTS |
The Governmental Accounting Standards Board recently issued an Exposure Draft, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The Exposure Draft defines public-private and public-public partnership arrangements (both referred to as PPPs) as arrangements in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use an infrastructure or other nonfinancial asset (the underlying PPP asset) for a period of time in an exchange or exchange-like transaction.
Some PPPs meet the definition of a service concession arrangement (SCA), and for those PPPs, the Exposure Draft carries forward the requirements in Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. For PPPs that meet the definition of a lease, but not the definition of an SCA, Statement No. 87, Leases, would apply.
For PPPs that are not SCAs and are not leases, a transferor generally would be required to recognize an asset for the underlying PPP asset and a deferred inflow of resources for consideration received or to be received as part of the PPP. A governmental operator would be required to report an intangible right-to-use asset related to an underlying PPP asset that either is owned by the transferor or is the underlying asset of an SCA.
The Exposure Draft also provides guidance for accounting and financial reporting for availability payment arrangements (APAs) in which a government compensates an operator for services that may include designing, constructing, financing, maintaining or operating an underlying infrastructure or other nonfinancial asset for a period of time in an exchange or exchange-like transaction.
The Exposure Draft would be effective for fiscal years beginning after June 15, 2021, and all reporting periods thereafter. The Exposure Draft is available for comment until September 13, 2019.