The influential Commons Treasury committee believes confusion over the two standards presents a risk of ‘arbitrage’ ­ or using them to produce the best possible result.

A committee report revealed ‘disappointment’ over the delay to IFRS, which it blamed on the Treasury having misjudged the complexity of the issues involved, ‘in particular the issue of accounting for PFI assets’.

The root problem is the existence of both Financial Reporting Standard 5A, published by the Accounting Standards Board, and the Treasury’s revised Technical Note 1, which has effectively become a competitor standard.

Both standards were supposed to become obsolete when the move to IFRS was announced in the 2007 Budget, but this year’s Budget revealed a postponement, meaning FRS5A and Technical Note 1 could be in operation for another two years.

The committee was concerned by the diverse approach to PFI accounting that already seems to be in place. In particular, there were worries that while the National Audit Office might be very strict on the treatment of PFI assets, appointed auditors of the Audit Commission were less rigid.

The report said: ‘We recommend that the Treasury… seek to ensure that PFI accounting under International Financial Reporting Standards is implemented across the public sector in a consistent, effective and transparent manner.’

It added: ‘The Treasury appears to have misjudged the scale and complexity of the issues involved in the transition to IFRS, in particular, the issue of accounting for private finance initiative assets.’

MPs were told the delays to IFRS came because of problems at the MoD over the number of PFI assets needing to be reviewed, and in the NHS where allocations for 2008-09 had already been made, raising the risk of placing many health bodies in breach of their statutory financial obligations if the plans for i nternational standards had gone ahead.