News Release 06-17-10


GASB Issues Revised Proposal on Service Concession Arrangements

***Written Comments Requested by August 17, 2010***

Norwalk, CT, June 17, 2010—The Governmental Accounting Standards Board (GASB) today issued its revised Exposure Draft (ED), Accounting and Financial Reporting for Service Concession Arrangements. The revised ED was unanimously approved for reexposure. The deadline for submitting written comments on the revised ED is August 17, 2010.

The objective of this project is to provide accounting and financial reporting guidance for service concession arrangements (SCAs), which are a subset of public-private partnerships. This involves determining whether existing authoritative guidance is sufficient to address the accounting and financial reporting issues resulting from SCAs, or whether new standards are necessary to address these issues.

As used in this revised ED, an SCA is an arrangement between a transferor (a government) and an operator (governmental or nongovernmental) in which (1) the transferor conveys to an operator the right and related obligation to provide services through the use of infrastructure or another public asset (a “facility”) and (2) the operator collects and is compensated from fees from third parties. Recent examples of SCAs include long-term arrangements associated with toll roads, hospitals, and student housing.

The scope of the original ED (issued in June 2009) included arrangements in which the transferor did not retain control of the facility subject to an SCA, and used the control criteria to determine what the accounting should be, distinguishing between arrangements in which control was retained or transferred. After considering the written comments received from constituents regarding the original proposal, the scope of this revised Exposure Draft has been modified in that the control criteria (determination of services, clientele, and prices and entitlement to a significant residual interest in the facility) are now included as a scope criterion. As a result, arrangements in which control is transferred to the operator would not be subject to the requirements of this proposed Statement.

The original ED also proposed that transferors would report a liability upon commencement of an SCA for consideration received (such as up-front payments, installment payments received from an operator, or an operator-provided facility). After considering respondent feedback and further discussions of the definitions in Concepts Statement No. 4, Elements of Financial Statements, the Board concluded that the consideration from an operator would be more appropriately reported by the transferor as a deferred inflow of resources, reduced by any liabilities incurred by the transferor in the arrangement.

The GASB urges interested parties to review the revised ED and provide input on areas in which they agree or disagree regarding the significant changes from the previous ED. All comments are considered during the Board’s deliberations leading to a final Statement. When the Board is satisfied that all alternatives have adequately been considered and modifications, if any, have been made, a vote is taken on the Statement. A majority vote is required for adoption.

The revised ED, including instructions for submitting written comments, may be downloaded free of charge from the GASB’s website at

About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board’s diverse constituency, including preparers and auditors of government financial statements, users of those statements, and members of the academic community. More information about the GASB can be found at its website