30 June 2006
A statutory advisory board has chastised the Treasury for its delay in revising guidance on accounting for Private Finance Initiative schemes.
In its ninth annual report, the Financial Reporting Advisory Board states: 'The PFI still looms large as an area where the board continues to have misgivings about the consistent interpretation of accounting guidance across the public sector.
'The board remains deeply concerned about the “missing assets” associated with those PFI schemes where the assets are on neither PFI partner's balance sheet.'
The FRAB had asked the Treasury to 'take corrective action' against such 'off/off' balance sheet accounting and 'impose proper accounting discipline' through amending its Technical note 1: How to account for PFI transactions, last updated in 2003. But the Treasury said it preferred to delay making any revisions until the conclusion of current PFI-related international accounting discussions.
The board was unconvinced, stating it 'does not accept the Treasury view that inconsistent accounting treatment should be allowed to continue until an international accounting standard is developed… action is required now'. It calls on the Treasury to issue an updated technical note later this summer, once the Office for National Statistics' survey of PFI schemes is finished.
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