Project Pages

Service Concession Arrangements

Primary Objective: The objective of this project is to provide accounting and financial reporting guidance for service concession arrangements (SCAs). This entails determining whether existing authoritative guidance is sufficient to address the accounting and financial reporting issues resulting from SCAs, or whether new standards are necessary to address these issues.

Status: The Board reviewed the ballot draft of the Accounting and Financial Reporting for Service Concession Arrangements at the December 2010 meeting. The Board approved the release of the Statement.
 

Service Concession Arrangements—Project Plan

Background:
There is no single, widely-accepted definition of the term public/private partnership (PPP). However, many descriptions characterize a PPP as an arrangement between a government and a private sector entity to deliver a governmental asset (normally infrastructure or a public facility) and, often, the related public service (in some cases, the arrangement may be solely for the delivery of the public service related to an existing governmental asset). In this way, PPPs are an alternative to traditional procurement methods used by governments to accomplish a public duty or responsibility. With traditional procurement methods, most of the risks associated with the underlying project remain with the government. With a PPP, these risks generally are allocated between the government and the private sector entity. This allocation of risks to the parties involved in a PPP can be quite complex. Because of this, determining the accounting and financial reporting for the property associated with these arrangements involves the consideration of conceptual topics including control over the use of the property, the bearing of risks and rewards related to the property, and governmental accountability for infrastructure assets and the services they provide.

Though the above description of PPPs is relatively basic, individual arrangements can take on a number of forms. The various types of PPPs often are distinguishable by the extent of private sector involvement with the major phases of the underlying project. As the level of involvement of the private sector entity increases, their assumption of risk and responsibility for the project generally also increases.

As the issues involving the nation’s infrastructure and public facilities continue to grow, PPPs have become more prevalent in practice. Entering into PPPs may be seen as beneficial from the point of view of the government for a variety of reasons, including the following:

  • They provide the government with the ability to leverage existing infrastructure and public facility assets to generate additional available resources in the form of up-front payments from the private sector entity for the right to operate such assets.
     
  • They may be used to facilitate construction of necessary new infrastructure and public facility assets and transfer the risks associated with their construction and maintenance to a private entity.
     
  • They may be used to provide services to the government’s constituencies on what is intended to be a more efficient and cost-effective basis. 
PPPs often result in governments transferring certain rights and responsibilities associated with the underlying property (including the right to collect revenues and the responsibility of operation and maintenance) and the responsibility to provide certain services to an existing private sector entity or a new entity created especially for providing such services. Examples of PPPs include:

  • A hospital authority transferring its assets, liabilities and hospital operations to a not-for-profit hospital system through a lease and management agreement, with the hospital authority’s ongoing operations being limited to issuing conduit debt for the not-for-profit hospital system and serving as a “pass-through” for governmental grants.
     
  • A university leasing land to a third-party developer for construction of a dormitory building, with the building being leased back to the university or the units being leased directly to university students and faculty by the developer.
     
  • A state leasing a portion of its turnpike system to a private consortium in exchange for an up-front payment.
     
  • A state entering into an agreement with a private consortium to build and then operate a tollway in exchange for an up-front payment.
Currently, PPPs often are being accounted for under existing guidance, including the lease accounting provisions found in National Council on Governmental Accounting Statement 5, Accounting and Financial Reporting Principles for Lease Agreements of State and Local Governments, and the financial reporting entity provisions found in GASB Statement No. 14, The Financial Reporting Entity, as amended by GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units. However, the accounting and financial reporting conclusions arrived at under such guidance may not appropriately consider the conceptual topics noted earlier. 

Accounting and Financial Reporting Issues:

  1. How should a government report the property associated with a SCA? Specifically, should the government report the property as a capital asset, and if so, for SCAs involving new construction, at what point should the property be recognized and how should the property, along with any related liabilities, be measured in the financial statements?
     
  2. How should a government report inflows of resources generated through a SCA, including inflows from upfront payments made by the private sector entity and inflows from revenue-sharing provisions in the SCA?
     
  3. How should the government report guarantees and other commitments it makes to the private sector entity, or to other parties on behalf of the private sector entity, as part of a SCA, including guarantees of the private sector entity’s debt and minimum-revenue guarantees made to the private-sector entity?
     
  4. What impact could a SCA have on a government’s financial reporting entity?
     
  5. What information should be provided in the notes to the financial statements to provide adequate information to the users of financial statements to allow them to understand the economic substance of a SCA? 

Based on the nature and extent of the modifications to the original Exposure Draft, the Board agreed that reexposure would be appropriate. A Revised Exposure Draft was issued on June 17, 2010, with a comment deadline of August 17, 2010. The Revised Exposure Draft asks for respondent comments on the following three specific issues.

Issue 1

The scope of the original Exposure Draft included arrangements in which the transferor did not retain control of the facility subject to an SCA and used the control criteria to determine what the accounting should be, distinguishing between arrangements in which control was retained or transferred. The scope of this Revised Exposure Draft has been modified in that the control criteria (determination of services, clientele, and prices and entitlement to a significant residual interest in the facility) are now included as a scope criterion. As a result, arrangements in which control is transferred to the operator are not subject to the requirements of this proposed Statement.

Issue 2

The original Exposure Draft proposed that transferors report a liability upon commencement of an SCA for consideration (such as up-front or installment payments received from an operator or an operator-provided facility). Based on respondent feedback and further discussion of the financial statement elements in Concepts Statement No. 4, Elements of Financial Statements, the Board reconsidered its earlier decision and concluded that the consideration from an operator would be more appropriately reported by the transferor as a deferred inflow of resources, reduced by any liabilities incurred by the transferor in the arrangement.

Issue 3

In the original Exposure Draft, the Board had proposed that either the transferor or the governmental operator report the revenues and expenses for the service provided, depending on which entity was accountable for the services. The Board reconsidered its original decision based on respondent comments. As a result, this Revised Exposure Draft would instead require a governmental operator to report all revenue and expenses associated with the operation of the facility, and the transferor would recognize only its portion of the shared revenues.

Project History:
This project was added to the potential project list in January 2006, and then to the GASB research agenda in August 2006. In November 2006, the International Public Sector Accounting Standards Board (IPSASB) added a project on SCAs to its agenda and requested that the SCA project staff of the GASB also serve as the project staff for the IPSASB. As part of that project, a research paper largely prepared by the GASB staff describing the nature and extent of use of PPPs around the world, as well as potential accounting and financial reporting issues to be addressed related to these arrangements, was presented to the IPSASB in July 2007.

A Consultation Paper that further explores the accounting and financial reporting issues identified in the aforementioned research paper and provides the proposals of the IPSASB to address these issues was issued in March 2008. The following areas of accounting and financial reporting for SCAs are addressed in the Consultation Paper:

  • Reporting of the underlying property to the SCA, including which party to the arrangement should report the property as an asset, the timing of recognition and method of measurement of the asset, and the recognition and measurement of liabilities associated with the recognition of the property as an asset
     
  • Recognition of revenue by the government related to upfront payments received from the private sector entity and inflows received through third-party user revenue-sharing provisions
     
  • Financial reporting of guarantees and other commitments made by the government to, or on behalf of, the private sector entity, including minimum third-party user revenue guarantees and guarantees of the debt of the private sector entity
     
  • Potential consolidation of the private sector entity into the reporting entity of the government
     
  • Financial statement disclosures.
The GASB staff also served as the lead project staff for the preparation of the IPSASB Consultation Paper.

For property associated with SCAs, the Board tentatively concluded in the July 2008 meeting that control over use of the property should be considered in determining whether the grantor in an SCA should report the related property as a capital asset. The Board tentatively agreed on criteria to assess whether the grantor controls the use of the asset. These criteria are made up of two aspects: (1) control over the service provided through the property and (2) control over the residual interest in the property at the end of the arrangement. The Board tentatively concluded that grantor control over the service provided through the property should be evidenced by the grantor controlling or regulating what services the operator is required to provide and how it is required to provide them with the property, to whom it is required to provide them, and the price ranges or rates that can be charged for services. The Board did not decide on the nature of the residual interest that must be controlled by the grantor. The residual interest aspect of the control criteria will be further deliberated at the next meeting.

The Board also tentatively concluded that for SCAs in which the grantor reports the property as a capital asset, the operator would have an asset reflecting either (1) its unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor or (2) its ability to access the property and charge users of the public service in arrangements for which there is no unconditional right to receive a financial asset because the amounts are contingent on the extent that the public uses the service. The nature of the asset reported by the operator described in (2) will be deliberated at the August meeting.

The project was the subject of discussion at the July 2008 meeting of the Governmental Accounting Standards Advisory Council.

At the August 2008 meeting, the Board tentatively decided to follow an approach similar to that in the IFRIC 12 draft wherein the government “grantor” (now transferor) is required to control the residual interest, and the residual interest needs to be significant in order for the grantor to continue to or initially recognize the property as their asset.

In addition, the Board tentatively concluded that the operator would report an intangible asset representing a right to access the grantor’s property. The Board also tentatively concluded that when the operator has obtained a right of ownership to the grantor’s property in the form of an intangible asset in a public/public partnership, the grantor should not reduce its carrying value of the asset.

At the September 2008 meetings, the Board tentatively agreed that when neither of the control criteria is met, the transferor does not recognize the asset on its financial statements during the SCA. Thus, when the asset already exists, it should be derecognized by the transferor. If the agreement is for new construction, the Board will propose that the transferor not recognize the property as an asset during construction and that outlays be expensed as incurred.

The Board tentatively agreed that revenue should be recognized over the life of the agreement as contingent events occur. The Board also tentatively agreed that it will propose that the transferor not recognize an asset representing its right to share in revenues received from third parties by the operator during its use of the asset involved in the SCA.

At the October 2008 teleconference and November 2008 meeting, the Board tentatively decided that resources received in a transaction when the control criteria are not met, and the transferor derecognition an existing asset in this transaction should be accounted for like a sale but decided to revisit the issue of revenue recognition at the December 2008 meeting.

The Board tentatively decided that the accounting for backloaded payments and payment holidays associated with public-private partnerships should be measured based on the estimated fair value of the total arrangement, and the implicit financing by the transferor should be accounted for using the effective interest method whereby the interest portion should be recognized as revenue or expenses each period. The Board also tentatively concluded that the measurement attribute to apply to the transferor’s right to a reversion of the associated asset when only the control over residual interest criterion is met should be measured at the fair value of the property at the date of reversion.

The Board tentatively concluded that while not all guidance in the standard will apply to every type of SCA, specific guidance should exist in the final standard to assist governments in determining which portions of the standard would be applicable to its SCAs. Additionally, guidance should exist to help governments differentiate between service contracts and privatizations.
The Board then discussed a government operator’s valuation of the intangible asset representing its right to access the transferor’s property. The Board tentatively agreed that a “recognizable intangible asset” should be recognized and measured at fair value at the transaction date.

At the December 2008 meeting the Board reached the following tentative conclusions:

  • A transaction in which the transferor receives resources and derecognizes an existing asset because the control criteria are not met is similar to a privatization and that the derecognition should be treated as a sale of property in which gains or losses are recognized as appropriate.
     
  • The definition of a SCA should include those agreements in which services are delivered to the public.
     
  • A figure should be placed in the final Statement depicting the types of arrangements that are and are not within the scope of the standard.
     
  • Receipts of up-front payments should be classified as a liability by governments if the government maintains active involvement in the arrangement.
At the January 2009 meeting, the Board reviewed a preliminary draft of the standards section of the proposed Statement and suggested various revisions.

At the March 2009 meeting, the Board again considered whether service and management arrangements should be included in the scope of the proposed Statement tentatively concluded that service and management arrangements should be excluded from the scope of the project. Therefore, the scope of the project will focus solely on SCAs.

At the April 2009 meeting, the Board deliberated whether upfront payments received by transferors should be reported as an other financing source or as a deferred revenue in governmental funds. Ultimately, the Board tentatively concluded to not provide guidance at this time. It will be explained in the Basis for Conclusions that the Board is considering issues of recognition in financial statements prepared using the current financial resources measurement focuses in its Conceptual Framework project for Recognition and Measurement Attributes and that it would be premature to provide guidance for accounting for upfront payment until the Board has finalized recognition concepts. The Board also tentatively concluded that, for cost/benefit reasons, the transferor should not be required to report construction-in-progress.

At the May 2009 meeting, the Board tentatively concluded that a decision flow chart for the scope of the proposed Statement should be included to provide additional guidance for practitioners to determine whether or not a particular arrangement is within the scope of the proposed Statement. After noting that the FASB and IASB have applied a rights and obligations approach in their recent Discussion Paper, Leases: Preliminary Views, the Board tentatively concluded that further consideration of the rights and obligations approach is warranted because lease transaction have significant similarities to services concession arrangements.

At the June 2009 meeting, the Board tentatively concluded to follow a control-focused approach based on rights and obligations, similar to that in the FASB / IASB discussion paper, Preliminary Views on Lease Accounting, for reporting service concession arrangements by the government operator. The Board also tentatively concluded that a gain should be recognized upon commencement of arrangements in which the transferor does not have control over but still retains a significant residual interest in the facility. The Board tentatively concluded that a liability should be recognized by a governmental operator if information that is prominent—that is, conspicuous or known to the governmental operator—indicates the facility is not in the specified condition and the cost to restore the facility to that condition is reasonably estimable. At the June 2009 teleconference, the Board tentatively decided that a transferor should report its residual interest in newly acquired or constructed facilities at the completion of construction along with a deferred inflow that is not amortized, but rather recognized as revenue at the date of reversion of the facility. A majority of the Board members voted for the release of the Exposure Draft, Accounting and Financial Reporting for Service Concession Arrangements.

At the November meeting, the Board reviewed respondent comments received in response to the Exposure Draft, Accounting and Financial Reporting for Service Concession Arrangements, and deliberated various issues relating to the scope and focus of the standards. The Board tentatively concluded to include language in the standards that would emphasize the focus on an operator’s provision of primary services associated with a facility, clarify the exclusion of agency arrangements, and clarify the inclusion of intangible assets in the scope of the standards. The Board tentatively decided to remove the existence of a significant residual interest as a control criterion and instead include the provision as a scope criterion. The Board also discussed comments received from respondents concerning the Exposure Draft’s proposed use of a control approach to determine the proper accounting for SCAs. The Board tentatively concluded to reclassify the remaining control criteria (determination of services, clientele, and prices) as additional scope criteria.

At the January 2010 meeting, the Board tentatively decided that accounting guidance for transactions in which a transferor retains a significant residual interest but does not control the services, clientele, and prices should be accounted for with lease accounting, if appropriate. The Board also tentatively concluded that a liability should be recognized by a governmental operator if information that is prominent—that is, conspicuous or known to the governmental operator—indicates the facility is not in the specified condition for return to the transferor at the end of the SCA and the cost to restore the facility to that condition is reasonably estimable. Also, a transferor should capitalize improvements made by the operator to the facility over the term of an SCA; improvements increase the capacity or efficiency of the facility. The operator should increase the value of its intangible asset by the value of any improvements made by the operator to the facility over the term of the SCA; improvements increase the capacity or efficiency of the facility. The Board tentatively concluded that the transferor should not be required to depreciate the facility if the operator is required to return the facility in its original or an improved condition.

At the February 2010 meeting, the Board tentatively concluded that an operator participating in a revenue sharing arrangement in an SCA should always record the gross amount of revenues generated from the operation of a facility. A transferor participating in a revenue sharing arrangement in an SCA should recognize revenue when it is earned in accordance with the terms of the arrangement. The Board tentatively concluded that a transferor participating in a revenue sharing arrangement in an SCA should record a receivable at the inception of the SCA for only the unconditional payments expected to be received over the term of the arrangement.

At the March 2010 meeting, the Board tentatively concluded that the credit recorded for the transferor’s receipt of consideration (for example, up-front payments, constructed facilities) at the inception of an SCA should not be recorded as a liability, but should instead be recorded as a deferred inflow unless the transferor has specific contractual obligations to sacrifice financial resources under the SCA agreement.


Service Concession Arrangements—Minutes for Deliberations

Minutes of Teleconference, November 17, 2010

The Board reviewed a ballot draft of Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The Board, after making minor clarifying changes, voted unanimously to issue the final Statement.

Minutes of Meeting, October 25, 26, and 28, 2010


The Board reviewed a preballot draft of a final Statement, Accounting and Financial Reporting for Service Concession Arrangements, recommending minor clarifying changes. A ballot draft of the final Statement will be reviewed at the November 2010 teleconference.

Minutes of Teleconference, October 5, 2010

The Board continued deliberations on the revised Exposure Draft, Accounting and Financial Reporting for Service Concession Arrangements, based on comments received from respondents. The Board addressed comments that were categorized into three sections: Modification to Include Consideration as Criteria to Be an SCA, Reduction of Deferred Inflows for Related Liabilities, and Reporting Classification of Intangible Assets.

The Board tentatively agreed to add language to paragraph 4a to explicitly include “significant consideration” as a criterion to determine if an arrangement should be considered an SCA.

The Board also tentatively decided that a contractual obligation of a transferor to provide a capital asset or a capital improvement as part of an SCA represents a liability to the transferor. The Board tentatively determined that the proposed language regarding revenue recognition associated with the fulfillment of an obligation should be added to paragraph 10 and included in the final Statement.

Finally, the Board tentatively concluded not to establish prescriptive guidance as to where a government operator should display intangible assets associated with an SCA arrangement.

At the October 2010 meeting, the Board will review a preballot draft of the final Statement.

Minutes of Meeting, September 14-16, 2010


The Board commenced deliberations on the revised Exposure Draft, Accounting and Financial Reporting for Service Concession Arrangements, based on comments received from respondents. The Board addressed comments that were categorized into nine sections: Clarification of What Criteria Is Required to Determine Existence of an SCA, Modification to Include Consideration as Criteria to Be an SCA, Financial Risk Exposure, Distinguishing Between Substantive Approval and Ministerial (or Compliance) Approval, Clarification that Existing Literature Addresses Transactions in Which Control Is Not Retained, Should Exclusive Use of or Rights to a Capital Asset Impact the Transferor’s Accounting for Capital Assets Transferred or Built, Transferor Treatment of Construction in Progress, Reduction of Deferred Inflows for Related Liabilities, and Reporting Classification of Intangible Assets.

The Board tentatively decided to add language to paragraph 4 to explicitly express the Board’s intent that all criteria must be met. Additionally, the Board tentatively decided to amend paragraph 46 of the Basis for Conclusions to clarify its intent for not requiring the capitalization of construction in progress.

The Board did not reach a conclusion regarding modifications to the SCA criteria to include consideration. It was argued by some Board members that consideration need not be required for an arrangement to be considered an SCA. The Board noted that this topic was discussed in the past and requested that the project staff perform additional research on the matter to be discussed during the October teleconference.

Regarding the reduction of deferred inflows for related liabilities, an additional issue was raised by a Board member as to whether or not a contractual obligation of a transferor to provide a capital asset or capital improvements as part of an SCA arrangement met the definition of a liability as defined in Concepts Statement No 4, Elements of Financial Statements. It was suggested that an obligation of a transferor to provide a capital asset or capital improvements would not be a liability because the capital asset or capital improvements revert back to the transferor at the end of the arrangement and could possibly be a deferred inflow. The Board did not reach a conclusion on this issue and will continue deliberations on the matter during the October teleconference.

At the October 2010 teleconference, the Board will continue its discussion of respondents’ comments and deliberate on changes to the proposed Statement recommended by the staff.

Minutes of Teleconference, June 1, 2010

The Board reviewed and provided comments on a ballot draft of the proposed revised Exposure Draft, Accounting and Financial Reporting for Service Concession Arrangements. The Board members suggested changes to further clarify the draft material. After discussion, the Board voted unanimously to issue the revised Exposure Draft.

Minutes of Meeting, May 11-13, 2010


The Board reviewed the preballot draft of the revised Exposure Draft and made certain changes to clarify the provisions in the draft document. A ballot draft will be considered at the June teleconference.

Minutes of Teleconference, April 20, 2010

The Board deliberated the criteria for determining when a transferor's contractual obligation to sacrifice financial resources under a service concession arrangement should be recorded as a liability by the transferor. The Board discussed the three criteria proposed by the staff, which related to a transferor's ownership of a facility, responsibility to ensure that a facility is fit for use, and promises to provide services. The Board agreed with the concepts underpinning the criteria but directed the staff to consolidate the criteria to eliminate potential redundancy.

The Board also discussed the changes made to the proposed Statement since the issuance of the Exposure Draft and discussed whether to issue a revised Exposure Draft or a final Statement. The Board tentatively decided to issue a revised Exposure Draft in June given the extent of the changes made to the Exposure Draft since its issuance.

Minutes of Meeting, March 29-31, 2010

The Board first deliberated the issue of the proper classification of the credit associated with the consideration recorded by a transferor at the inception of a service concession arrangement. The Board discussed if this credit should be recorded as a liability, deferred inflow, or combination of the two elements, considering the nature of the transaction and the implications for other areas of governmental accounting and financial reporting. The Board tentatively decided that the credit in these transactions should not be recorded as a liability but should instead be recorded as a deferred inflow unless the transferor has specific contractual obligations to sacrifice financial resources under the contract. The Board indicated that specific criteria should be developed to indicate when it would be appropriate for a liability to be recorded and asked the staff to perform additional research in this area. The Board also asked the staff to perform research to identify specific contractual obligations to sacrifice financial resources included in existing service concession arrangement contracts. The results of this research will be discussed by the Board at the April teleconference.

The Board then reviewed a draft of the standards section of the proposed Statement, Accounting and Financial Reporting for Service Concession Arrangements, and made various changes to further clarify the document.

Finally, the Board reviewed a comparison of its proposed Statement and the International Public Sector Accounting Standards Board’s Exposure Draft, Service Concession Arrangements: Grantor, and discussed significant differences between the two documents. The Board did not elect to make any changes to the proposed Statement as a result of this comparison.

Minutes of Meeting, February 16-18, 2010

The Board discussed the scope of the final standard, Accounting and Financial Reporting for Service Concession Arrangements, by analyzing certain contract terms provided detailing a municipal golf course operation arrangement and applying the scope provisions of the standard to the contract terms. The Board tentatively decided that the scope provisions of the standard should remain unchanged to allow facilities such as golf courses to be included.

The Board then deliberated issues raised by respondents to the Exposure Draft in the area of revenue sharing. The Board tentatively decided that a certain paragraph should be removed from the final standard to ensure that an operator would always record the gross amount of revenues received in revenue-sharing arrangements. The Board reasoned that, because agent relationships are excluded from the scope of the proposed standard, an operator would always be retaining the economic risks associated with the operation of a facility and therefore should always record the gross amount of revenues received, even if some of those revenues will eventually be remitted to a transferor. The Board also tentatively decided to include language in the final standard stating that revenue should be recognized by the transferor as it is earned in accordance with the terms of the arrangement.

The Board also deliberated the issue of initial measurement for SCAs with revenue sharing arrangements. The Board tentatively decided that a transferor should record a receivable at the inception of the arrangement for any unconditional consideration it expects to receive. Revenue received from revenue sharing arrangements would not be considered unconditional consideration because the amount of revenue that will be earned by the operator in the future is uncertain. The Board also discussed the classification of the related liability or deferred inflow that would be recorded at the inception of an SCA. The Board indicated that active involvement of a transferor in the revenue generated over the course of an SCA would be an important indicator that a liability should be reported and asked the staff to do additional research related to this concept of active involvement in the context of SCAs.

Finally, the Board deliberated the accounting for arrangements in which no reportable consideration is given to the transferor from the operator. Consistent with its previous tentative decision, the Board tentatively decided that, because no unconditional consideration is received in these arrangements, no liability should be recorded by the transferor at the inception of the arrangement.

Minutes of Meeting, January 5-7, 2010

The Board continued its deliberations of issues raised by respondents to the Exposure Draft, Accounting and Financial Reporting for Service Concession Arrangements; specifically, issues relating to transferor and operator accounting and financial reporting.

The Board discussed several different issues relating to transferor accounting and reaffirmed several of its previous tentative decisions in this area that were proposed in the Exposure Draft. The Board tentatively decided to clarify in the final standard that the reduction of a transferor’s liability over the course of the service concession arrangement (SCA) should be reported as revenue. The Board also tentatively decided to clarify that the transferor should capitalize improvements made by the operator during the term of the SCA. Finally, the Board tentatively decided to include language in the final standard stating that a transferor is not required to depreciate an SCA facility if the operator is required to return the facility in its original or an improved condition. The Board also suggested various changes relating to transferor accounting and financial reporting to further clarify the final Statement.

The Board deliberated several different issues relating to operator accounting and financial reporting and reaffirmed several of its previous tentative decisions in this area that were proposed in the Exposure Draft. The Board tentatively decided to clarify in the final standard that an operator should generally treat the creation of a liability to return a facility in a specified condition as an expense when the liability is incurred. The Board also tentatively decided to require operator capitalization of improvements made to the facility during the term of the SCA. The Board also suggested various changes relating to operator accounting and financial reporting to further clarify the final Statement.

The Board also addressed comments received in response to the illustrations used in the Exposure Draft, tentatively deciding to make no further changes to those illustrations for their inclusion in the final standard.

The Board will deliberate comments received in response to the Exposure Draft relating to revenue sharing arrangements and discuss unresolved issues relating to the definition of SCAs during the February 2010 meeting.

Minutes of Meeting, November 18-20, 2009

The Board reviewed various respondent comments received in response to the Exposure Draft, Accounting and Financial Reporting for Service Concession Arrangements, and deliberated various issues relating to the scope and focus of the proposed standard.

First, the Board discussed comments received from respondents concerning the scope of the Exposure Draft. The Board tentatively decided to uphold its previous decisions excluding governmental funds from the scope of the standard. The Board also tentatively decided to include language in the standard that would emphasize the focus on an operator’s provision of primary services associated with a facility, clarify the exclusion of agency arrangements, and clarify the inclusion of intangible assets in the scope of the proposed standard. The Board also tentatively decided to include additional language in the Basis for Conclusions of the standard to further clarify the distinction between service concession arrangements (SCAs) and service and managements arrangements (SMAs) and emphasize the exclusion of SMAs from the scope of the standard. Finally, the Board tentatively decided to remove the existence of a significant residual interest as a control criterion and instead include the test as a scope criterion.

The Board also discussed comments received from respondents concerning the Exposure Draft’s proposed use of a control approach to determine the proper accounting for SCAs. The Board tentatively agreed to add additional language to clarify the meaning of certain terms used in the proposed standard’s discussion of control. The Board also debated the suitability of using a control approach instead of an ownership approach and discussed the possibility of a transferor completing a partial sale of an asset by relinquishing control of that asset, referring to their related discussions as part of the conceptual framework recognition and measurement project. The Board tentatively decided to include the remaining control criteria (determination of services, clientele, and prices) as additional scope criteria. Under this tentative decision, arrangements falling within the scope of the standard would follow the Exposure Draft’s proposed accounting for when control remains with the transferor. The Board also stated that other arrangements that will be excluded from the scope of the proposed standard because of the change should be accounted for with lease accounting if appropriate.

Minutes of Meeting, October 6-8, 2009

The Board discussed a high-level overview of comment letters received to date in response to the Exposure Draft. The Board made note of confusion some respondents expressed over the definition of service concession arrangements and over the scope of the potential standard and discussed the need for a more robust definition of service concession arrangements and, potentially, the need for a definition to more clearly distinguish service and management arrangements. The Board will begin to formally review comment letters during the November Board meeting.

Minutes of Teleconference, June 23, 2009

The Board began the discussion of the service concession arrangements project with deliberations of an issue related to reporting a residual interest in newly acquired or constructed facilities or improved facilities in which not all control criteria are met. The Board tentatively decided that a transferor should report its residual interest in newly acquired or constructed facilities at the completion of construction along with a deferred inflow that is not amortized but, rather, recognized as revenue at the date of reversion of the facility.

The Board then tentatively decided to insert a paragraph into the proposed Statement permitting disclosures for multiple SCAs to be made individually or in aggregate.

Finally, the Board reviewed and made editorial changes to the proposed Statement. The Board balloted the document out of session; however, Ms. Taylor, Mr. Belsky, and Mr. Williams noted that they would provide alternative views to the Exposure Draft.

Minutes of Meeting, June 2-4, 2009

The Board reviewed a staff paper on the rights and obligations approach for governmental operators that is based on an approach proposed in the joint FASB/IASB discussion document, Leases: Preliminary Views. The Board tentatively decided to propose a control-focused approach based on rights and obligations for governmental operators similar to that proposed in the FASB/IASB discussion paper.

Next, the Board discussed gain recognition by a transferor in situations in which the transferor does not meet the control criteria, but still retains a significant residual interest in, the facility subject to a service concession arrangement. After deliberating the pros and cons of deferring the gain and recognizing it over the life of the agreement versus recognizing a gain upon commencement of the agreement, the Board tentatively determined that the gain should be recognized upon commencement of the agreement. Several Board members expressed their intent to submit an alternative view that supports the deferral approach.

The Board also discussed recognition of potential liabilities by an operator that may arise if it is known that the facility is not in the specified condition that will be required by the agreement upon return of the facility to the transferor. The Board tentatively determined that a liability should be recognized by a governmental operator if information that is prominent—that is, conspicuous or known to the governmental operator—indicates the facility is not in the specified condition, and the cost to restore the facility to that condition is reasonably estimable.

Finally, the Board reviewed the preballot draft of the proposed Statement and made editorial suggestions. The Board is scheduled to discuss a ballot draft of the proposed Statement and vote on the issuance of this Exposure Draft at the teleconference on June 23, 2009.

Minutes of Teleconference, May 12, 2009

The Board reviewed a draft version of the Standards and Basis for Conclusions sections of the proposed Statement.

The Board tentatively agreed that a decision flow chart for the scope of the proposed Statement should be included as an appendix to assist practitioners in determining whether or not a particular arrangement is within the scope of the proposed Statement.

The Board tentatively agreed to the following revisions to the proposed Statement:

  • A footnote providing a list of examples should be added to clarify what is meant by the phrase “infrastructure or public facility asset.”
     
  • A disclosure of the nature and amount of assets and liabilities related to service concession arrangements will be required.
     
  • A reference to the disclosure requirements in APB Opinion No. 22, Disclosure of Accounting Policies, should be included in the paragraph discussing accounting and financial reporting in governmental funds. 

After noting that the FASB and IASB recently proposed a rights and obligations approach in their recent Discussion Paper, Leases: Preliminary Views, the Board tentatively decided that further consideration of the rights and obligations approach is warranted because lease transactions have similarities to services concession arrangements. The staff was directed to further consider application of a rights and obligations approach and, based on that analysis, either add a further explanation of why this approach was not proposed to the Basis for Conclusions or recommend appropriate changes that reflect this approach.

A preballot draft of the proposed Statement will be discussed at the June meeting.

Minutes of Meeting, April 21-23, 2009

The Board deliberated whether up-front payments received by transferors should be reported as another financing source or as a deferred revenue in governmental funds. After considering the pros and cons of these two alternatives and the limited application to governmental funds of the proposed guidance, the Board tentatively decided to not provide guidance at this time and to explain in the Basis for Conclusions that the Board is currently considering issues of recognition in financial statements prepared using the current financial resources measurement focus in its Conceptual Framework project for Recognition and Measurement Attributes and that it would be premature to provide guidance for accounting for up-front payments until the Board has finalized the recognition concepts.

The Board then discussed guidance for governmental fund reporting related to facilities that are subject to a service concession arrangement and are controlled by the transferor. The Board tentatively decided that this guidance should be addressed through the Comprehensive Implementation Guide similarly to the existing guidance for donation of capital assets.

Next, the Board deliberated the sufficiency of guidance in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, regarding the use of enterprise funds for reporting by governmental operators. The Board tentatively agreed that existing guidance in Statement 34 regarding the use of enterprise funds is sufficient for providing guidance for fund reporting for governmental operators.

The Board then deliberated the reporting of accumulated costs of a governmental operator’s construction in progress. The Board tentatively decided that the proposed Statement need not address classification of these costs.

Then the Board deliberated the reporting of construction in progress by transferors. The Board tentatively determined that, for cost/benefit reasons, the transferor should not be required to report such construction in progress.

Finally, the Board reviewed a draft of the standards section of the proposed Statement and provided the staff with feedback that would further clarify the proposed guidance.

Minutes of Teleconference, March 31, 2009

The Board first deliberated the methods that may be used by a transferor to recognize revenue from up-front payments, annual installments, or predetermined sums. The Board previously considered a proposal that such revenue be recognized using the straight-line method, consumption method, or annuity method, with the annuity method being more appropriate for a service concession arrangement with a term extending over several decades. After redeliberating the effects of various methods, the Board tentatively decided that the proposed standard should provide that a “systematic and rational method” be used to recognize revenue, without specifying a particular method.

Then the Board deliberated reporting for multi-element arrangements when assigned values of elements are allocated on a basis other than fair value. The Board determined that a specific footnote was unnecessary and that reference to these arrangements should be removed.

Next, the Board deliberated the measurement attribute to be applied to the intangible asset that results when a governmental operator constructs a capital asset that is controlled by the transferor in return for the right to collect user fees. After deliberating whether to use historical cost or fair value to measure the recognizable intangible asset, the Board tentatively decided that an historical cost basis should be used.

The Board then discussed the methods of amortization to be applied to the governmental operator’s intangible asset. The Board tentatively decided that a method that is both systematic and rational should be used and that no specific method need be identified in the proposed Statement.

Finally, the Board deliberated the provision of guidance related to arrangements in which the transferor makes payments to the operator for construction or improvement of the facility and for subsequent operation. The Board tentatively determined that guidance for these types of arrangements already exists and that guidance in the draft of the proposed Statement should be deleted. The Basis for Conclusions will describe why these arrangements were removed from the scope of this proposed Statement and will include a reference to the applicable existing guidance.

Minutes of Meeting, March 10-12, 2009

The Board deliberated issues related to service and management arrangements (SMAs) that meet the definition of a public/private partnership, including whether some SMAs should continue to be included in the scope of the project and, if so, what disclosures about those SMAs are essential to understanding the financial statements. The Board considered the possibility of narrowing the scope of the potential disclosures so that they did not have the potential to be overly burdensome to preparers in comparison to the benefits that the potential disclosures could provide.  Additionally, the Board noted that under existing guidance for accounting and disclosures, no concerns have been raised regarding SMAs.  As a result, the Board tentatively concluded that SMAs should be excluded from the scope of the project.

Therefore, the project will now be limited to service concession arrangements.

Minutes of Meeting, January 27-29, 2008

The Board reviewed a copy of the draft standards section and provided feedback to the staff. The Board suggested that the staff include more background information in the introduction section of the standard. The Board also agreed to redeliberate the scope of the project at the February meeting, after considering the staff’s recommendation, to better determine the applicability of this standard to service and management contracts. Then, the Board suggested that the standards section refer to an “operator” as a “government operator” to avoid confusion as to the party for whom the Board is creating standards. Finally, the Board suggested that the disclosures for transferors and government operators be included in one section of the standard to minimize redundancy.

Minutes of Meeting, December 16–18, 2008

The Board continued its deliberations on public/private partnerships (PPPs) with a discussion of transactions in which the transferor receives resources and derecognizes an existing asset because the control criteria are not met. The Board tentatively decided that this is similar to a privatization and that the derecognition should be treated as a sale of property in which gains or losses are recognized as appropriate. The Board then discussed the definition of a PPP within the context of the proposed Statement. The Board tentatively determined that the definition should include those agreements in which services are delivered to the general public. The Board will redeliberate a revised definition to be proposed by the staff at the January meeting. Next, the Board addressed the scope of the project. The project staff proposed that designbuild arrangements should be removed from the scope of this project because the service is provided to the government institution as opposed to the general public. The Board tentatively agreed with this change. Additionally, the Board tentatively determined that design-build contracts and privatizations not specially addressed in the proposed Statement should be dealt with in the basis for conclusions in the final Statement. The Board also tentatively agreed that a figure should be placed in the final Statement depicting the types of arrangements that are and are not within the scope of the standard. The Board then addressed the topic of service and management contracts. The Board tentatively decided that, for the purposes of the standard, service and management contracts should be combined and addressed together in the guidance. Next, the Board deliberated the staff’s proposed criteria to assist preparers in determining if arrangements constitute a public-private or public-public partnership. The Board tentatively determined that these criteria were not necessary and should not be included but that an improved definition should be crafted to assist preparers in making this determination. The Board then discussed the sufficiency of guidance in the proposed Statement for service contracts and management contracts to assist preparers. The Board tentatively determined that consideration of any proposed guidance for note disclosures associated with service and management contracts should specifically relate to those types of arrangements that are meaningful to users without be onerous for preparers. Based on this input, the staff will develop a note disclosure proposal that is specifically related to service and management contracts for discussion at the January meeting. Finally, the Board redeliberated the classification of up-front payments as a deferred inflow or a liability. The Board tentatively determined that such receipts should be classified as a liability by governments if the government maintains active involvement in the arrangement.

Minutes of Meeting, November 4–6, 2008

The discussion began with a brief review of the major tentative decisions that had been reached to date. Then, the Board began to consider open items that were identified while preparing the first draft of the standard.

The first item the Board deliberated was an alternative for the word grantor in a public/private partnership (PPP) arrangement. The Board tentatively decided to use the term transferor, used in Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues, in place of grantor because the Board believed that grantor had other connotations.

Next, the Board deliberated the proper accounting for resources received in a transaction when the control criteria are not met, and the transferor derecognizes an existing asset. The Board tentatively decided that this transaction should be accounted for like a sale but decided to revisit the issue of revenue recognition at the next meeting.

The Board deliberated the accounting for backloaded payments and payment holidays associated with PPPs. The Board tentatively decided that such payments should be measured based on the estimated fair value of the total arrangement, and the implicit financing by the transferor should be accounted for using the effective interest method whereby the interest portion should be recognized as revenue or expenses each period.

The Board then discussed the measurement attribute to apply to the transferor’s right to a reversion of the associated asset when only the control over residual interest criterion is met. The Board tentatively concluded that such a right should be measured at the estimated fair value of the property at the date of reversion.

Next, the Board discussed incorporating guidance for other types of PPPs, such as service concession arrangements, into the final standard. The Board tentatively concluded that while not all guidance in the standard will apply to every type of PPP, specific guidance should exist in the final standard to assist governments in determining which portions of the standard would be applicable to its PPPs. Additionally, guidance should exist to help governments differentiate between service contracts and privatizations.

The Board then discussed a government operator’s valuation of the intangible asset representing its right to access the transferor’s property. The Board tentatively agreed that a “recognizable intangible asset” should be recognized and measured at fair value at the transaction date.

Finally, the Board discussed the accounting for up-front payments from an operator and a transferor’s reporting of such a receipt. The Board agreed to determine if such a payment should be classified as a liability or a deferred inflow at a future meeting.

Minutes of Teleconference, October 14, 2008

The Board briefly discussed the comments received by the International Public Sector Accounting Standards Board regarding its consultative paper for service concession arrangements. No conclusions were reached; however, the comments received did alert the Board and staff to additional issues that could be addressed in the project.

The Board then discussed the financial reporting for guarantees and commitments in service concession arrangements (SCAs). The Board tentatively decided that specific guidance regarding guarantees and commitments does not need to be developed for this project based on the guidance that already exists in FASB Statement No. 5, Accounting for Contingencies. The Board did recognize that reporting issues associated with guarantees may need to be addressed in the future as part of a broader project on that subject.

The Board then went on to discuss financial reporting entity implications in SCAs. The Board tentatively decided that the criteria presented in GASB Statements No. 14, The Financial Reporting Entity, and No. 39, Determining Whether Certain Organizations Are Component Units, are sufficient to assess whether an SCA operator is a component unit of a grantor government.

Finally, the Board deliberated required note disclosures. Currently, there is no authoritative US accounting literature that provides guidance for financial statement disclosures for SCAs. The Board considered the IASB’s Standing Interpretation Committee 29, Service Concession Arrangements, financial statement disclosure requirements as well as Public-Private Partnerships, Government Guarantees, and Fiscal Risk, prepared by the staff team of the International Monetary Fund. The Board tentatively decided that the final standard should include required note disclosures similar to the staff’s recommendation of (1) A general description of the public/private partnerships (PPPs) in effect during the reporting period, including management’s objectives for entering into them; (2) The nature and extent of rights acquired under PPPs, which may include rights to expect the provisions of services and revenue sharing; (3) The nature and extent of obligations, guarantees, and other commitments assumed under PPPs, which may include guarantees of operator debt and guarantees of minimum revenue amounts for the operator; and (4) The nature and amount of assets and liabilities related to PPPs that are recognized in the statement of financial position. The Board also tentatively decided that disclosure requirements of other authoritative guidance that may apply to aspects of the PPP also should be followed, as appropriate. These may include, for example, disclosures related to (a) property, plant, and equipment present in GASB Statement No. 34, Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments; (b) financial liabilities present in GASB Statement 34; and (c) guarantees and commitments present in FASB Statement No. 5, Accounting for Contingencies. The Board also tentatively determined to redeliberate the aggregation of PPP disclosures at a future meeting.

Minutes of Meeting, September 24–26, 2008

The Board began by discussing issues associated with financial reporting when the proposed control criteria have not been met in service concession arrangements (SCAs) for both newly constructed and existing assets. The Board tentatively agreed and will propose that when neither of the control criteria is met, the grantor not recognize the asset on its financial statements during the SCA. Thus, when the asset already exists, it should be derecognized by the grantor. If the agreement is for new construction, the Board will propose that the grantor not recognize the property as an asset during construction and expense outlays as incurred.

Next, the Board discussed reporting for SCAs when only the “control over services” criterion is met. The Board tentatively decided and will propose that if the grantor does not own the property, SCA-related outlays be expensed as incurred. Similarly, when the grantor does own the property, the Board will propose that the asset be derecognized upon commencement of the agreement reflecting the transfer of the property to the operator.

The Board then addressed agreements for which only the “control over residual interest” criterion is met. The Board tentatively determined and will propose that if the SCA agreement meets the definition of a lease, both the grantor and the operator apply the lease accounting guidance from FASB Statement No. 13, Accounting for Leases, as amended. The Board tentatively determined that the grantor should derecognize the asset upon commencement of the SCA when the arrangement cannot be classified as a lease. The Board will determine whether an asset should be recorded by the grantor for a “right to reversion,” the grantor’s right to the residual interest in the asset, at a later date after ascertaining if a reliable way to measure such an asset exists.

The Board then discussed the reporting for contractually determined inflows and revenue-sharing provisions. The Board has tentatively concluded and will propose that for contractually determined inflows, the result of upfront payments received from the operator in advance of performance meets the definition of a liability or a deferred inflow. The Board also tentatively decided that specific criteria for liability recognition do not need to be developed in the scope of this project. The Board also tentatively determined that the “future revenue” criteria of Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues, should be adapted to recognize the narrower scope of the project and incorporated into the proposal.

Next, the Board tentatively agreed that revenues resulting from upfront payments should be proposed to be recognized using the straight-line method or another method better reflecting the operator’s economic consumption of its access to the underlying property. This would depend on the facts and circumstances of the arrangement. The revenue would be amortized over the life of the agreement beginning once the property is fully operational and available to the operator to generate revenues from third parties.

The Board then addressed accounting for revenue-sharing agreements in SCAs. The Board tentatively determined that it will propose that revenue be recognized over the life of the agreement as contingent events occur. The Board also tentatively agreed that it will propose that the grantor not recognize an asset representing its right to share in revenues received from third parties by the operator during its use of the asset involved in the SCA. Finally, the Board tentatively determined that it will propose that government grantors report revenue received in a revenue sharing arrangement net, whereas government operators should report gross revenue.

Minutes of September 9, 2008 Teleconference

The Board discussed issues encountered by a government “grantor” when the control criteria are met in a public/private partnership. Along with recognizing the capital asset in its financial statements, the timing and measurement of the asset and the associated liability were addressed.

The Board considered and tentatively decided to propose the approach of the UK Accounting Standards Board whereby the grantor reports the asset when it comes into use unless the grantor bears significant construction risk, in which case the property would be reported as an asset as it is constructed. The Board tentatively concluded that this approach is consistent with the control approach that has been tentatively adopted for this proposal.

The Board addressed the issue of measurement of the capital asset and related liability when payments are separable into construction and service elements, inseparable, and reduced or eliminated because the operator is able to collect usage fees from third parties. With regard to separable payments, the Board tentatively decided to propose the guidance used for finance leases in FASB Statement No. 13, Accounting for Leases, as amended. That is, the asset and related liability could be recognized at amounts equal to the fair value of the property or at the lower of the present value of the scheduled construction payments. With regard to inseparable payments, the Board tentatively decided to propose that the service element of the payment be separated from the repayment of the liability.

The Board then tentatively agreed to propose that interest be imputed on the associated liability in accordance with APB Opinion No. 21, Interest on Receivables and Payables, as opposed to ignoring an interest charge. The Board deliberated the rate to be used when imputing the interest expense. UK guidance states that a rate reflecting the operator’s expected rate of return on the property should be used. The Board tentatively decided to propose the approach used in FASB Statement 13, as amended, whereby the incremental borrowing rate of the lessee, in this case, the grantor, is used.

Finally, the Board addressed the issue of arrangements involving reduced or eliminated grantor payments. The Board tentatively decided to propose the guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, which would require the grantor to report the underlying property at its fair value and a related credit reflecting the receipt of consideration in advance of performance that should be recognized over the life of the service concession agreement.

Minutes of Meeting, August 19–21, 2008

The Board began with a discussion of the nature of residual interest associated with public/private partnership arrangements. As part of this discussion, the Board reviewed three approaches taken by various standards setters to address the aspect of residual interest: 1) the IFRIC (International Financial Reporting Implementation Committee) Draft 12 approach, 2) the IFRIC approach, and 3) the IPSASB (International Public Sector Accounting Standards Board) approach. The Board tentatively decided to follow an approach similar to that in the IFRIC 12 draft wherein the government “grantor” is required to control the residual interest, and the residual interest needs to be significant in order for the grantor to continue to or initially recognize the property as their asset.

The Board deliberations continued with discussions as to the type of asset the government operator would report if the government grantor reports the property as an asset in a public/public partnership. The Board tentatively concluded that the operator would report an intangible asset representing a right to access the grantor’s property. The Board also tentatively concluded that although the asset of the operator meets the description of an intangible asset under Statement No. 51, Accounting and Reporting for Intangible Assets, this transaction is outside the scope of that Statement. Therefore, the capital asset guidance in Statement 51 should not be followed for purposes of recording this asset. The Board also tentatively concluded that when the operator has obtained a right of ownership to the grantor’s property in the form of an intangible asset in a public/public partnership, the grantor should not reduce its carrying value of the asset.

Minutes of Meeting, July 8–10, 2008

The Board deliberated the financial reporting of the property associated with public-private partnerships (PPPs). This included separate discussions on reporting the property associated with types of PPPs referred to as service concession arrangements (SCAs), and other PPPs, namely service and management contracts, design-build arrangements, and privatizations.

For property associated with SCAs, the Board tentatively concluded that control over use of the property should be considered in determining whether the government (grantor) in an SCA should report the related property as a capital asset. The Board tentatively concluded on criteria to assess whether the grantor controls the use of the asset. These criteria are made up of two aspects: (1) control over the service provided through the property and (2) control over the residual interest in the property at the end of the arrangement. The Board tentatively concluded that grantor control over the service provided through the property should be evidenced by the grantor controlling or regulating what services the operator (generally a private-sector entity) must provide and how it must provide them with the property, to whom it must provide them, and the price ranges or rates that can be charged for services. The Board did not conclude on the nature of the residual interest that must be controlled by the grantor. The residual interest aspect of the control criteria will be further deliberated at the August meeting.

The Board also tentatively concluded that for SCAs in which the grantor reports the property as a capital asset, the operator would have an asset reflecting either (a) its unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor or (b) its ability to access the property and charge users of the public service in arrangements for which there is no unconditional right to receive a financial asset because the amounts are contingent on the extent that the public uses the service. The nature of the asset reported by the operator described in (b) will be deliberated at a future meeting.

For PPPs other than SCAs, the Board tentatively concluded that the grantor should report the property associated with a service or management contract and a design-build arrangement as a capital asset, and the operator should report the property associated with a privatization as a capital asset.

Minutes of Meeting, May 21–23, 2008

The discussion began with an overview of public/private partnerships (PPPs), including common characteristics of PPPs, the potential benefits of these arrangements, the government sectors for which PPPs have been executed or are being considered, and the potential accounting and financial reporting issues to be addressed as part of the project for state and local governments.

The Board deliberated the scope for the project and tentatively concluded that for purposes of establishing an initial scope, the project should include arrangements between a government and a private sector entity to deliver a public asset and/or service. The Board considered narrowing this initial scope to only include those arrangements in which an operations concession is involved. The Board tentatively concluded, however, to proceed using the broader initial scope.

Finally, the Board deliberated whether “public-public partnerships,” described as arrangements similar to PPPs except that they involve two governmental entities, should be included in the scope of the project. The Board tentatively concluded to include these arrangements in the scope of the project.

Service Concession Arrangements—Major Tentative Decisions to Date 

Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, was approved in December 2010.

Service Concession Arrangements—Relevant Links