12 November 2004
Peter Morgan, head of accountancy development at the National Audit Office, has called for greater transparency in the presentation of Private Finance Initiative accounts.
He told an SMi conference held on November 10 on PFI accounting and auditing: 'It must seem very strange to the man on the Clapham omnibus that public assets such as hospitals and schools do not necessarily appear on the balance sheets of either private companies or the public sector.'
The Treasury could help rectify the 'off-balance sheet mind set' by removing some of the incentives that encourage it, he said. 'Local authorities and the health sector face real difficulties getting PFI credits unless their investment is off-balance sheet. The rules require it.'
Morgan argued for health and education departmental guidance on this to be revised, and also for Treasury guidelines on PFI accounting to be streamlined. 'With the move towards whole of government accounts, the fact that a fair chunk of the asset base of the nation is not recognised is an issue that has to be addressed.'
Ian Glenday, executive director of the Office of Government Commerce Gateways programme, argued that the on/off-balance sheet situation needed to be clarified.
He said: 'The OGC is very concerned about the horrendous cost of advisers to PFI projects and, given the current confusion, you can readily see why.'
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