Making Concessions: Political, Commercial and Regulatory Tensions in Accounting for European Roads PPPs
Accounting and Business Research, Forthcoming
50 Pages Posted: 25 Mar 2010
Date Written: March 17, 2010
Governments increasingly use private finance to fund roads infrastructure. In particular the European Commission has promoted the use of public private partnerships (PPPs) to deliver the projects forming the trans-European Network. This use of private finance raises important questions about how public monies and assets are accounted for.
The paper examines firstly, accounting for roads PPPs in Spain and the UK, countries which not only have considerable experience in the use of private finance for the provision of roads, but also act as exemplars of a number of differences which may be significant from an international perspective in terms of financial reporting and economic outcomes. Secondly, it examines the tensions between national, European and international accounting pronouncements.
Our findings suggest that the business environment has influenced the development of accounting policy. In Spain a powerful toll sector presence within the legal framework has led to substantial variations, having real economic impact. In the UK, the accounting regulator has prevailed over political concerns. In Europe, conflict remains between political choice and technical accounting. Since PPP projects are on the increase across the world these findings have global relevance, as the adoption of international accounting pronouncements will not remove these conflicts.
Keywords: IFRIC 12, public private partnerships, off balance sheet accounting, public sector accounting
JEL Classification: M41
Suggested Citation: Suggested Citation