PPP projects to have new accounting norms

Font Size

Print

Feedback

Email

Discuss

• Discount UK Shopping

Related Articles

Exports growth pegged at 8 pct in JanPrice rise will be in control soon: PranabNo plan to raise FII limit in debt: FinMin

New Delhi, Oct 7: With operators being clueless about how to treat various assets in public-private partnership projects in their accounts books, apex accounting body ICAI has proposed new accounting norms to clear the air.

“The proposed standard will help in ending the confusion prevailing over how such transactions should be recorded in the books of accounts,” ICAI accounting standard board chairman Amarjit Chopra said.

Under the PPP agreements, which are usually in build-operate-transfer or rehabilitate-operate-transfer or public-to-private transfer basis, assets like land and equipment are provided by the government. Operators are confused over the way these assets should be treated, he said. On such assets, under service concessional agreements, only rights are available to operators, he added.

The draft, comments on which have been sought by November 10, suggests that an operator will have to disclose the amount of revenue and profits or losses recognised during a period on exchanging construction services for a financial or intangible assets.

The entities should apply the accounting norms from April 1, 2009, the draft says.

The assets provided by the government may be financial or intangible and operators would be required to record their exposure to financial instruments as well. These financial instruments may be of various kinds such as loans or receivables, and other kinds of assets. Operators will have to recognise a financial asset to the extent that it has an unconditional contractual right to receive cash or other financial asset from the government, as per the draft.

Further, they will have to record intangible asset along with the payment for its construction services, which it may get partly in form of a financial asset and partly by an intangible asset.