Title: The economic effects of new PPP accounting treatments: a critical analysis of the IPSAS 32

Authors: Nicola Moscariello; Ettore Cinque

Addresses: Department of Economics, University of Naples II, Italy ' Department of Economics, University of Naples II, Italy

Abstract: Public-private partnerships (PPPs) represent a fundamental instrument to bridge the 'infrastructure gap' in the Eurozone. The accounting treatment for PPPs influences the diffusion of PPP practices and the effectiveness and efficiency of these contracts. Notwithstanding the existence of contrasting theories regarding the way to record PPPs contracts, the International Public Sector Accounting Standard Board (IPSASB) has recently issued the accounting standard IPSAS 32 proposing to switch from the mostly applied 'risks and rewards' to a 'control' approach. Although the 'control' approach presents important advantages relative to the 'risks and rewards' criterion, scientific arguments clearly supporting the former financial reporting model over the latter still lack, while macro-economic drawbacks associated to potential pro-cyclical effects of the 'control' approach are likely to emerge. Therefore, an accurate 'effect analysis' should be carried out by the European Union before adopting the IPSAS 32.

Keywords: public-private partnerships; PPPs; control approach; economic effects; pro-cyclicality; financial reporting; IPSAS 32; infrastructure gap; accounting standards; European Union.

DOI: 10.1504/GBER.2016.076237

Global Business and Economics Review, 2016 Vol.18 No.3/4, pp.310 - 319

Received: 14 Jan 2014
Accepted: 25 Sep 2014

Published online: 28 Apr 2016 *

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