Project Pages

Public Private Partnerships and Availability Payment Arrangements, including Reexamination of Statement 60

Project Description: This project addresses accounting and financial reporting for public-private partnerships (PPPs) and availability payment arrangements (APAs). The project will consider (1) potential amendments to Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, and potential amended or new implementation guidance to better address accounting and financial reporting for service concession arrangements (SCAs) within its scope, (2) potential additional accounting and financial reporting guidance for other types of public-private partnerships not within the scope of Statement 60 or subject to the provisions of Statement No. 87, Leases, and (3) APAs.

Final Statement, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, approved: March 2020

Public Private Partnerships and Availability Payment Arrangements—Project Plan


Background: Broadly, the term public-private partnership can be used to describe several different types of arrangements that exist between governments and private parties, including but not limited to leases, capital and noncapital grants, contracting for services via vendor agreements or service management agreements, and disposals of operations to private entities. The pre-agenda research employed the following working definition:

Public-private partnerships [PPPs] are transactions in which a government contracts with another entity to design, build, or operate infrastructure assets or other capital assets. These entities generally are companies, but also may be not-for-profit organizations or other governments (a public-public partnership).

That definition generally is consistent with the definition adopted by the National Institute of Governmental Purchasing and by the International City/County Management Association. PPPs include, among other things, the following salient types of arrangements:

  • Design-build
  • Design-build-finance
  • Build-own-operate
  • Build-own-operate-transfer
  • Design-build-operate-maintain
  • Design-build-finance-operate
  • Design-build-finance-operate-maintain.  

Types of assets subject to PPPs primarily include roads, bridges, airport terminals, public transit, hospitals, student services at colleges and universities, sports facilities, jails, waste water treatment, and museums. However, virtually any public capital asset or service could be the subject of a PPP.

The pre-agenda research indicated an increased interest in PPP projects, primarily due to financial constraints on governments, and a particular increase in interest about the use of availability payments as alternative payment mechanisms for PPPs. The latter primarily is due to (1) the lower risk premiums demanded by private parties because availability payments are more predictable than tolls and user fees, and (2) decreased public opposition to PPPs with availability payments because they are less likely than PPPs with tolls or user fees to be perceived as selling or privatizing public assets.

As defined in Statement 60, SCAs are a subset of a PPP transactions but also include public-public partnerships. The pre-agenda research indicated that Statement 60 generally is effective in providing useful information about the economic substance of SCAs. However, certain issues have arisen regarding its application, including questions about applying the definition of an SCA to, for example, arrangements where an operator indirectly receives revenue for services.

A governmental transferor under Statement 60 may be similar to a lessor under Statement 87, and a governmental operator under Statement 60 may be similar to a lessee under Statement 87. However, there are significant differences in some of the accounting guidance. For example, Statement 87 provides guidance for determining the length of an agreement but Statement 60 does not.

Existing authoritative standards, including Statements 60 and 87, do not adequately address certain types of PPPs and APAs. Even if there are types of PPPs that are adequately addressed by existing standards, it may not be clear how those standards should be applied because of the complexity of the arrangements.

Accounting and Financial Reporting Issues: The project is considering the following issues:
  1. Should additional guidance be provided to address Statement 60 application issues that have arisen? Should additional guidance address, among other things:
    1.    Application of the collect-and-compensated-by-fees criterion
    2.    Application of the control-over-rates criterion?
  2. Should additional guidance on Statement 60 be provided via amendments, implementation guidance, or education outreach?
  3. Should Statement 60 be amended or superseded to address differences with Statement 87, including:
    1. The term of the agreement
    2. Measurement of receivables
    3. Measurement of obligations
    4. Classification of the asset as capital?
  1. What is the definition of a PPP?
    1. Should the definition be limited to infrastructure or also include other assets or services?
    2. Should the definition be limited to only PPPs that are not within the scope of Statement 60 or should it consider PPPs that meet the SCA definition?
           •   Some PPPs are arranged so that they meet some, but not all, of the criteria of an SCA. Should some or all such arrangements be addressed by including them in a PPP definition, by amending the SCA definition in Statement 60, or some other way?
    3. What specific criteria or characteristics should be used to define PPPs?
  2. What is the definition of an APA?
  3. Should recognition and measurement guidance for PPPs and APAs be based on Statement 60, Statement 87, or some other model?
    1. Do different types of PPPs require different reporting models?
  4. What disclosures should be required for PPPs and APAs, if any?
Project History:
  • Pre-agenda research approved: April 2017
  • Added to current technical agenda: April 2018
  • Task force established? Yes
  • Deliberations began: May 2018
  • Exposure Draft approved: June 2019
  • Comment period: June–September 2019
  • Redeliberations began: October 2019
  • Final Statement issued: March 2020

Public Private Partnerships and Availability Payment Arrangements—MINUTES

Minutes of Meetings, March 24–26, 2020

The Board reviewed the ballot draft of a final Statement, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, and provided clarifying edits. The Board then voted unanimously to approve the issuance of Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements.

Minutes Archive

Public Private Partnerships and Availability Payment Arrangements—TENTATIVE BOARD DECISIONS

Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, was approved in March 2020.