§ Mr. MacleanTo ask the Chancellor of the Exchequer if liabilities incurred by Departments of State as a result of(a) private finance initiatives and (b) public private partnerships will be accounted for under the principles outlined in Chapter 4 of the Resource Accounting Manual published in August. [96848]
§ Mr. Andrew SmithAny liabilities incurred as a result of such transactions will be accounted for in line with the requirements of Chapter 9 of the Resource Accounting Manual. This states that for all complex transactions, the overriding principles of Financial Reporting Standards (FRS) 5 "Reporting the Substance of Transactions" should be followed.
In particular, an amendment to the version of the Manual published in August 1999, which has been agreed with the Financial Reporting Advisory Board, will make clear that Private Finance Initiative (PH) transactions should be accounted for in accordance with the Treasury Taskforce's Technical Note No. 1 (revised) "How to account for PFI transactions".
The Technical Note sets out additional practical guidance on how the Accounting Standards Board's Application Note (AN) "Amendment to FRS 5—;Private Finance Initiative and Similar Contracts" is to be followed in the public sector and should be read in conjunction with the AN.
In addition, Chapter 4 of the Manual sets out the disclosure requirements in respect of commitments under contracts for which departments have not made provision in their resource accounts.