Service Concession Arrangements

  • Service Concession Arrangements

    Project Status

    The IPSASB approved IPSAS 32, Service Concession Arrangements: Grantor at its September 2011 meeting. IPSAS 32 is effective for periods beginning on or after January 1, 2014.


    Stephenie Fox

    Task Force

    The  IPSAS was developed by a Task Force consisting of:

    David Bean, Chair

    Ian Carruthers

    Marie-Pierre Cordier

    Jeanine Poggiolini

    Ken Warren

    Tim Youngberry

    Paul Mason, Acting Assistant Director, Professional Standards and Central Government.

    CIPFA, was also a member of the Task Force.

    The TBG has also been assisted by the Technical Advisors to members: Clark Antsis, Badouin Griton, and Joanne Scott.

    Objective(s) of project

    The objective of the project is to develop financial reporting guidance on service concession arrangements (SCAs) for the grantor.


    The project applies to all public sector entities, other than Government Business Enterprises (GBEs), preparing and presenting financial statements under the accrual basis of accounting.

    GBEs are required to apply International Financial Reporting Standards (IFRSs) which are issued by the International Accounting Standards Board (IASB).


    February 2010: Exposure Draft, Service Concession Arrangements: Grantor was issued in February 2010, with a comment period ending June 30, 2010.

    March 2007: The IPSASB issued a CP Accounting and Financial Reporting for Service Concession Arrangements to address the accounting and reporting issues for the grantor.

    November 2006: The IASBs International Financial Reporting Interpretations Committee (IFRIC) issued Interpretation 12 (IFRIC 12) Service Concession Arrangements with an effective date of January 1, 2008. IFRIC 12 does not address accounting for the grantor (generally, a government or other public sector entity) side of service concession arrangements.


    Issues the project will consider include (but are not necessarily limited to):

    • Clarifying terminology;
    • Assessing the adequacy of existing standards for addressing both known and anticipated service concession arrangements for the grantor;
    • Considering whether symmetry of accounting for both parties to a service concession arrangement is important;
    • Assessing cases when one or more of the criteria for control required for asset recognition by the grantor are not met;
    • Recognition of infrastructure and other assets and liabilities subject to service concession arrangements;
    • Recognition of revenue and expenditure flowing from these arrangements;
    • Considering the implications of guarantees and other commitments often present in service concession arrangements;and
    • Required disclosures.

    Task Force progress / Board discussions to date

    October 2011: IPSAS 32, Service Concession Arrangements: Grantor is issued.

    September 2011: The IPSASB approved IPSAS 32, Service Concession Arrangements: Grantor.

    June 2011: The IPSASB considered the remaining issues arising from respondents’ comments and agreed with the staff proposals to amend ED 43 to address those issues. The Task Force will develop a proposed final IPSAS for the IPSASB’s September 2011 meeting.

    March 2011: The IPSASB considered the responses related to the treatment of the performance obligation in ED 43 and agreed to revise ED 43 to consider the credit as an advance receipt rather than a performance obligation.

    November 2010: The IPSASB considered responses to Exposure Draft (ED) 43, Service Concession Arrangements: Grantor and reconfirmed the approach in ED 43 to mirror IFRIC 12.

    February 2010: The IPSASB issued an Exposure Draft (ED) 43, Service Concession Arrangements: Grantor, which mirrors IFRIC 12. ED 43 has a June 30, 2010 response date.

    December 2009: An ED was developed by staff supported by a task force of the IPSASB, comprised of Peter Batten, David Bean and Ian Carruthers, and with technical assistance from Paul Mason (CIPFA). The IPSASB approved ED 43, Service Concession Arrangements: Grantor, subject to changes agreed to at the meeting. The ED is a mirror of IFRIC 12 in terms of scope of arrangements covered, terminology and criteria for asset recognition. It addresses the grantor accounting issues that correspond to the operator accounting issues addressed in IFRIC 12. Application Guidance is provided on applying certain existing IPSASs to various parts of an SCA (e.g., asset, liability, revenue, and expense items). ED 43 includes disclosure requirements adapted from those set out in Interpretation 29 the IASBs Standing Interpretations Committee (SIC 29), Service Concession Arrangements: Disclosures. In addition, the ED includes Illustrative Examples to address the accounting issues faced by the grantor related to those in IFRIC 12 for the operator.

    September 2009: The IPSASB agreed that the scope of the draft ED for the accounting treatment of service concession arrangements by the grantor should mirror the scope of IFRIC 12, which specifies the accounting treatment of these arrangements by the operator. Additionally, the draft ED should include the same control criteria as those in IFRIC 12. Examples will be developed to illustrate contractual arrangements that are outside the scope of the draft ED.

    May 2009: The IPSASB discussed a first draft of an Exposure Draft (ED). A number of issues were raised with respect to terminology, treatment of whole-of-life assets, structure of the document and linkages to other IPSASs. The IPSASB expects to discuss a revised draft ED later in 2009.

    February 2009: The IPSASB discussed outstanding issues from the responses to the CP. The IPSASB reaffirmed that the standard would be developed using the control-based approach in IFRIC 12, including the conditions for control specified therein.

    Additional guidance is to be provided on:

    • The requirement for a significant residual value as it pertains to whole-of-life arrangements;
    • The concept of regulation as it relates to the public sector grantor in the asset recognition criteria; and
    • The discount rate to be used when the operators rate is not known.

    The IPSASB will discuss a draft ED at its May 2009 meeting.

    October 2008: The IPSASB discussed responses to the CP. The IPSASB agreed that respondents to the CP expressed general support for the principles espoused in the CP; however, Members felt further analysis and guidance was required on certain issues, including the following, before developing an ED:

    • Provide a bridge between the concepts of control and risks and rewards in determining whether the entity should recognize an asset in respect of a SCA;
    • Additional guidance, including examples, on applying the control over use criteria;
    • Use of the term significant in the residual interest criterion;
    • The appropriate discount rate to use when determining the fair value of the asset and any related liability;
    • Whether amounts received by the operator directly from the users of the service and other non-cash consideration meet the existing definition of a liability of the entity; and
    • Accounting and reporting when one or more of the control criteria are not met.

    These issues will be discussed at the February 2009 IPSASB meeting.

    March 2008: Consultation Paper Accounting and Financial Reporting for Service Concession Arrangements, published with a comment date of August 1, 2008.

    February 2008: The IPSASB approved Consultation Paper Accounting and Financial Reporting for Service Concession Arrangements.

    November 2007: The IPSASB reviewed a draft Consultation Paper, Accounting and Financial Reporting for Service Concession Arrangements. Key to the CP is discussion about the approach to grantor reporting of property subject to a service concession arrangement, for which the CP considers numerous approaches ultimately proposing criteria focusing on "control." Overall, the IPSASB was generally comfortable with the views reached within the CP but felt further discussion was needed in reaching some of those views. In particular:

    • More consideration of risks and rewards vs control;
    • Revised discussion relating to whole-of-life service concession arrangements; and
    • More consideration of both liabilities and obligations of the grantor.

    Approval of the CP for public comment is planned before the next IPSASB meeting in March 2008.

    July 2007: The IPSASB reviewed a research paper and brief issues paper with staff seeking confirmation as to the completeness of their understanding of PPP arrangements and related accounting and financial reporting issues. Overall the Board was comfortable though gave comments for consideration in particular relating to the numerous attributes of PPP arrangements. In addition, the Board (re)confirmed:

    • in considering alternatives for accounting for PPP arrangements, the subcommittee should not be constrained at this stage by existing accounting guidance; and
    • public-public partnerships should be considered by the subcommittee in developing the up-coming draft Consultation Paper.

    A Consultation Paper is scheduled to be approved in November 2007.

    March 2007: The IPSASB was updated on project progress and follow-up of decisions from the November 2006 meeting noting that the draft structure/content and timeframe for development of a CP had been confirmed with the subcommittee Chair, staff of the US Government Accounting Standards Board (GASB - who are writing the CP) and IPSASB staff.

    The IPSASB Chair noted his presentation at the International Seminar on Strengthening Public Investment and Managing Fiscal Risks from Public-Private Partnerships, March 7-8, 2007, Budapest. (See for copies of presenter slides and papers).

    November 2006: The IPSASB formally approved a project brief establishing a collaborative project. The project will commence with development of a CP to be drafted by a subcommittee. Subcommittee and project advisory panel membership was confirmed.

    July 2006: In conjunction with the IPSASB meeting, the IPSASB invited standards setters and other authoritative bodies from several countries - including Canada, China, Australia, France, Italy, Netherlands, New Zealand, South Africa, Spain, Switzerland, UK and USA; as well as the Public Sector Committee of the Federation des Experts Comptables Europeens, the IASB, and the Task Force on the Harmonization of the Public Sector Accounting - to participate in discussions about the potential for a collaborative project. It was decided to initiate such a project with a formal project brief to be approved in November 2006.

    Last updated: September 19, 2011


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