New guidance issued for federal public-private partnership disclosures
Disclosures about federal public-private partnerships will be required to be presented in federal reporting entities’ general-purpose financial statements under guidance issued Wednesday.
The Federal Accounting Standards Advisory Board (FASAB) established a definition of public-private partnerships in Statement of Federal Financial Accounting Standards 49, Public-Private Partnerships: Disclosure Requirements.
The standard identifies risk-based characteristics that need to exist before considering the partnership arrangement or transaction for disclosure. If these characteristics and other criteria are met, the standard requires disclosure of quantitative and qualitative information. The information is intended to assist users in understanding the nature of public-private partnerships, including:
The relative benefits/revenues received in exchange for the government’s consideration.
The contractual terms governing payments to and from the government.
Related risks to the government, including those deemed remote.
“Through collaboration among experts from the private sector and government, these standards have been developed to improve financial reporting by making the costs and related risks of such partnerships transparent,” FASAB Chairman Scott Showalter said in a news release. “The standards help ensure the federal government is accountable to its citizens by providing information that is understandable, relevant, and reliable.” Source: Journal of Accountancy.