15RU-006 Service concessions: grantor accounting

15RU-006 Service concessions: grantor accounting

Historically, infrastructure for public services has been constructed, operated and maintained by the public sector. However in recent years, governments have entered into service concession arrangements, which generally involve the private sector constructing, operating and maintaining such infrastructure on behalf of the government.


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Currently there is no Australian Accounting Standard which deals with how the public sector (the grantor) should account for such arrangements. Due to this lack of guidance, divergence exists between both the public sector and the private sector, and within the public sector.

Exposure Draft 261 Service Concession Arrangements: Grantor (ED 261) was issued to provide guidance to the public sector when accounting for service concession arrangements. Generally, on commencement of the arrangement the grantor will recognise a service concession asset and a liability. The initial balance sheet impact as well as the subsequent profit and loss impact could have wider implications for grantors for example when reporting under government financial statistics (GFS).

ED 261 will not apply to private sector entities. These entities will continue to apply Interpretation 12 Service Concession Arrangements where appropriate.

Submissions to the AASB for comment letters on the ED 261 proposals are due 27 July 2015.

Key points

  • ED 261 applies to public sector as ‘grantors’ in service concession arrangements.
  • Accounting is based on a controls approach.
  • Grantors will recognise an asset and a corresponding liability.
  • Accounting outcomes may have wider implications for example GFS reporting.

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