The Accounting Standards Board has vowed it will not compromise orPFI. weaken accounting standards to accommodate the government’s private finance initiative.
The ASB this week warned of the dangers of altering the rules to make allowances for the government and stressed it would fight to protect the principle of FRS5, which was introduced to halt an epidemic of financial scams in the 1980s.
‘Our aim is to prevent the re-introduction of dubious off-balance sheet schemes,’ said Sandra Thompson, the ASB’s principal projects director.
‘We will add a bit more guidance to say how FRS5 will apply to PFI. The government will have to choose whether or not it will adopt it, but it has no legal obligation to comply. We are responsible for accounts in the private sector; they will have to follow what our conclusions are.’
The comments are set to deepen the rift between the ASB and the Treasury over who remains liable for the underlying assets in PFI projects. The government is determined not to let PFI stray into the public sector borrowing requirement, arguing it is purchasing a service rather than a building and the cost should therefore remain off balance sheets.
Arthur Andersen, Deloitte & Touche, Ernst & Young and KPMG are among the firms which have supported the ASB’s guidance in principle.
‘The ASB rules must be robust; anything less would undermine the board’s achievements to date,’ said a KPMG spokesman.
‘The ASB’s standards were put in place for good reason, but firms want to achieve commercial projects through PFI. We sincerely hope a compromise can be reached,’ said Keith Stein, PFI partner at E&Y.
Paymaster General Geoffrey Robinson said he was prepared to ignore the ASB rulings if it threatened to halt PFI and public-private partnerships schemes.
‘The issue is being debated and the results of the consultation document are being looked at. We want the two sectors to work effectively and hope a solution can be found,’ added an ASB spokeswoman.
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