BusinessCorporate FinanceLondon Underground slams PPP groups over accounts

London Underground slams PPP groups over accounts

Groups involved in a £15bn public-private partnership to upgrade the capital’s tube network have been told by London Underground to reform their accounting procedures

The two groups involved in a £15bn public-private partnership to upgrade the
capital’s tube network have been told to reform their accounting procedures to
make comparisons of their work possible.

London Underground, which is managing a 30-year PPP with Metronet and Tube
Lines, said it was dissatisfied with the move by the groups to adopt divergent
treatments for PPP investment.

‘The decision of the two companies to adopt different accounting policies
makes the results meaningless as a basis for comparison,’ LU said in its
second-year report on the progress of the PPP. ‘Continuing commitment is
required from Metronet and Tube Lines to enable LU to assess financial
performance at the levels required.’

A spokesman for LU said: ‘We need clear financial information so that we know
where our money is going. We need to square up what we are paying with the work
that has been done, and at the moment it’s not clear that that’s what we’re
getting.’

Metronet uses FRS5 to account for PPP, and Tube Lines follows the SSAP9
standard.

Neither group has given any sign they will move to align their accounting
methods. A Metronet spokesman said the consortium was in an ‘ongoing dialogue’
with LU on the type of information required, but would only prepare data that
was ‘appropriate for Metronet to provide’ under its contract. Tube Lines would
only confirm that it was using SSAP9.

LU also hit out at the companies for the ‘blurred’ relationship in financial
statements between money invested and the actual amount of work done.

Metronet’s spokesman said the issue, would be cleared up over the coming
year. ‘The PPP contracts, the associated supply chain and funding were all
agreed by London Underground to be appropriate. There is complete transparency.’

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