www.pppinindia.gov.inPPP TOOLKIT
PPP TOOLKIT for Improving PPP
Decision-Making Processes

Sector: State Highway  |  Module 2: Work through the PPP process

Other issues related to contract management

Accounting for and auditing PPPs

The Concession Agreement will require the concessionaire to prepare its own audited accounts for the project.

Financial Reporting and Accounting for PPP Projects in India

Currently, there is no specific accounting guidance under the Indian accounting standards for PPP arrangements. Generally, infrastructure companies account for the infrastructure as a part of their fixed assets at the construction cost and do not recognise any revenue during the construction period. Revenue is normally recognised for the amount recoverable from the public sector and/or the amount recovered from the customers for use of the infrastructure only after the construction is complete. Further, there is no clarity or consistency regarding accounting for replacement and maintenance expenditure.

Financial reporting by the public sector of risks and liabilities in PPP transactions is very limited in India. Globally best practices require governments to reflect most PPP assets and associated liabilities on the government’s balance sheet. If they are not accounted for, then they are listed in the Notes to Account.

India’s proposed move towards convergence to International Financial Reporting Standards (IFRS) is expected to bring about standardisation in the manner in which PPP concession agreements are accounted for. In 2008, the Institute of Chartered Accountants of India published an Exposure Draft for accounting for Service Concession Agreements.

Auditing PPPs

The Comptroller and Auditor General of India has published Public Auditing guidelines for PPP projects. The Guidelines have been primarily framed for use by the Indian Audit & Accounts Department.

These guidelines are intended to provide a framework in auditing PPP projects to determine whether Government and other public authorities have got the best possible value for money.


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