The Rise and Rise of Public Private Partnerships: Challenges for Public Accountability

The increasing popularity of public private partnerships (PPPs) thrusts on to centre stage the inherent tension between accountability and transparency on the one hand, and efficiency and commerciality on the other. This paper explores a number of accountability issues that are exacerbated by a public private partnership structure. The organisational structure of a PPP, where much of the activity associated with the delivery of a public service is embedded in a private-sector entity, increases the likelihood that public scrutiny of decisions and actions is significantly inhibited     

Are Public Private Partnerships value for money?: Evaluating alternative approaches and comparing academic and practitioner views

In an earlier article in this journal (Grimsey, D., & Lewis, M. K. (2002b). Accounting for Public Private Partnerships. Accounting Forum, 26(3), 245–270), we examined the intricacies of the accounting issues raised by Public Private Partnerships (PPPs). It was argued that the critical accounting question from the public sector's viewpoint is not one of whether the arrangement is on or off balance sheet, but whether it represents good value for money. However, determining value for money for a PPP is an area in which, despite strong criticisms by a number of academic writers of the methods used by practitioners to evaluate value for money, surprisingly little engagement has taken place between the practitioners and the academics on the issues involved. This paper attempts to provide such an engagement. At the same time, because many of the academic critiques focus on the situation in one country (particularly the UK or Australia), we try to put matters into a broader, comparative context by considering approaches to value for money tests in a number of countries. Our examination is thus comparative in the sense of considering value for money tests in different countries, while also comparing the views of academics and practitioners.     

Risk Weighting and Accounting Choices in Public-Private Partnerships: Case Study of a Failed Prison Contract

A case study of a failed PPP contract shows how ex ante assessments of the extent of risk transfer from public-sector agencies to private-sector contractors were inadequate. Those assessments placed undue weight on some risks, and failed to assess others. The experience suggests that it is inappropriate to choose accounting treatments on the basis of ex ante assessments of risk transfer and risk sharing.     

Pricing Final Indemnification Payments to Private Sponsors in Project-Financed Public-Private Partnerships: An Application of Real Options Valuation

The extraordinary global growth in the private funding of public infrastructure projects in the form of public‐private partnerships (or PPPs) is expected to have major social and economic benefits—benefits that result in large part from improving the allocation of project risks between the public and private sectors. But with the financial crisis and severe tightening of credit likely to limit the financing and delivery of new projects, both project participants and their financiers need to manage the technical, economic, legal, and political complexities of infrastructure projects more carefully, especially in less traditional infrastructure deals that involve complex operations, new assets, or emerging markets. This paper proposes and illustrates the application of the real options valuation approach to a critical feature of most PPPs: establishing the final “indemnification” amount to be paid by a public administration to private partners in the project financing of those PPPs that face substantial market risks. In demonstrating this approach, the authors use the case of the Pedemontana Lombarda toll road, a major transportation infrastructure project in Northern Italy for which financial plans have been filed and whose start is now pending. The main function of real options in this case is to capture the effects on value of the major market risk in such projects—namely, the uncertainty about volume of traffic on the new road. The authors interpret the final indemnification price as the value of a real put option sold by the awarding authority to private investors (in the case of a project that would otherwise be unprofitable and have a negative NPV). The put option takes the form of a clause in the concession contract that gives investors the right, under certain circumstances, to sell the toll road back to the government for a fixed sum (in this case, €2.9 billion). According to the authors, this valuation approach is likely to be helpful in any kind of infrastructure project that faces risk stemming from the unpredictability of market demand and future revenue streams.     

The Existence and Composition of Audit Committees in the New Zealand Public Sector

This study investigates the association between the source of funding of New Zealand public‐sector entities (PSEs) and the existence and composition of their audit committees. We examine 134 PSEs in the health, local government and tertiary sectors. Of these PSEs, 81 (60%) have an audit committee. The size of the audit committees are on average larger than recommended by best practice guidelines. However, most of the PSEs comply with guidelines recommended for audit committee independence but not financial expertise. PSEs with higher levels of government funding are more likely to establish audit committees and PSEs that rely on funding from rate payers and debt providers are more likely to have audit committees with a majority of independent members. There is no support for the association between the source of funding and the level of financial expertise on audit committees.     

Risk transfer and stakeholder relationships in Public Private Partnerships

Drawing on stakeholder theory, this study seeks to gain an insight into the stakeholder management strategies used by the Procuring Authority in Irish road Public Private Partnerships to manage its complex stakeholder relationships.Based on interviews with 38 key stakeholders the findings of this study indicate that the allocation, transfer and management of risk impact on the quality of stakeholder relationships. A proactive and somewhat accommodating approach is used by the Procuring Authority in its relationship with the Special Purpose Vehicle, while there is some evidence that collaborative relationships exist between the public sector bodies responsible for allocating risk.     

The Upside to Fiscal Challenges: Innovative Partnerships Between Public and Private Sector

The first U.S. public‐private partnerships, or P3s as they are now called, began over 200 years ago. These contractual arrangements between government entities and private companies for the delivery of services or facilities have long been used for water/wastewater, transportation, urban development, and the provision of social services. And the use of such partnerships is increasing because they provide an effective means for meeting public needs, maintaining a high level of public control, improving the quality of services, and increasing the cost‐effectiveness of traditional delivery methods. Although outsourcing of public services is sometimes used to accomplish many of the same goals, P3s are likely to be a solution when public funds are not available and when:

• ? Capital is required to upgrade the infrastructure and so achieve a lower cost, or higher quality, of services.
• ? The contract horizon in the P3 transaction is sufficiently long for the investor/operation to recoup investment dollars and a rate of return.
• ? City residents make payments for the service provided, creating the revenue stream for private profits.
• ? The private partner in the P3 has a low cost of capital, often attributable largely to a large and sophisticated balance sheet.

This article uses examples of several recent P3 contracts to illustrate their role in shifting risk and increasing collaboration between the public and private sectors.     

Value for Money and Risk Relationships in Public–Private Partnerships: Evaluating Program‐based Evidence

Value for money – VfM (the provision of improved public infrastructure and services at lower cost) – is a central rationale for the deployment of public–private partnerships (P3s). However, it remains unclear how VfM is actually created in P3s. There are several issues that surround the ex ante evaluation conducted during P3 assessment, including: transparency of the process, engagement of stakeholders, potential restrictions on current and future public sector flexibility, and political influences that call into question the legitimacy of the process. This study examines these issues using Alberta's P3 projects executed since 2003, and interviews 35 key participants and stakeholders. The findings suggest that while the transfer of risk from the public to the private sector is a key driver of VfM, it may overstate the extent to which planning related risks can be transferred. This paper recommends enhanced VfM component disclosures and transparency as the evaluation process evolves. Furthermore, a more rigorous approach to risk conceptualisation and valuation should be adopted. Risk allocation should be about managing not only occurrence, but also impact of the risk factor. Finally, political interference must be moderated to allow for the optimal realisation of the best possible choices presented by P3 deployments.     

Generational Accounts for The Netherlands: An Update

This paper extends the standard generational accounting methodologyby incorporating prospective changes in the economic environment,assigning the benefits of government purchases to generations,distinguishing between public consumption and public investment,and transforming the generational accounts into government budgets.It applies the methodology to the Netherlands. An expected increasein labor-force participation almost offsets the adverse effectof aging on the sustainability of the Dutch public finances.Since the rise in labor-force participation occurs before thebulk of the aging, the government will have to run sizable fiscalsurpluses in the next decades in order to create the budgetaryroom for higher age-related government expenditures in laterdecades.     

Disclosure Of Audit Committees by Public Companies in Australia 1988–1990

The existence of audit committees in public companies can improve the quality of the financial reporting process, aid the actual and perceived independence of both the internal and external auditors, and improve financial statement users' confidence in the quality of the information. These benefits will be enhanced by disclosure of audit committees in the financial statements. This study examined the incidence and form of the disclosure of audit committees in annual reports by major Australian public companies over the period 1988–1990. The results showed that disclosures by larger companies increased during this time. Rates of disclosure varied considerably depending on the auditor and was positively associated with the size of the organisation. Companies with audit committees are encouraged to consider enhanced methods of disclosure such as those outlined in AUP 31 Communication with an Audit Committee.     

Past Abuses and Future Uses of Private Finance and Public Private Partnerships in Transport

The article explains the origins of the Private Finance Initiative (PFI) and the way the policy has evolved under the present Labour administration into Public Private Partnership (PPP). The author gives an assessment of the future prospects for the PFI/PPP in the transport sector. He believes that PPPs can make a considerable contribution towards efficient transport service delivery and this will be maximized if there is a better understanding of what the policies are seeking to achieve. Much of the action in the immediate future in transport PPPs will be with the local authorities, including the new Greater London Authority.     

Performance Audit of the Operational Stage of Long-Term Partnerships for the Private Sector Provision of Public Services

This study investigates the challenges associated with designing a system to evaluate the mature operating phase of long-term partnerships with the private sector for the provision of public services (PPPS), an area largely neglected by a performance audit (PA) focus. It argues that assessing economy, efficiency and effectiveness (the three Es) are key to any PA, but that their nature is contextually defined; that auditing for effectiveness involves going beyond a 'watchdog' to a 'sheepdog' role; and that internal evaluation procedures provide insights that are necessary, but not necessary and sufficient to evaluating the achievement of the three Es in the PPPS mature operating stage. Findings are based on an analysis of the literature and an engagement with an audit office. The paper elucidates the meaning of each of the three Es in the context of PA of the PPPS mature operating stage.     

关于我国信息产业核算若干问题的探讨

随着信息经济时代的来临 ,以及信息产业对经济发展贡献率的不断提高 ,一个国家或地区信息化发展水平如何 ,越来越被更多的人所关注。目前 ,尽管国内外已有许多测度信息化水平的研究成果 ,但多数研究只局限于从某个方面来反映信息化水平或程度 ,真正从国民经济核算角度 ,通过建立信息产业核算框架较全面地展示信息化水平的文献还不多。本文试图从这方面对我国信息产业核算做些理论方面的探索     

公私合作制在我国电信融资中的应用研究

多元化融资渠道,吸引更多的民间资本参加电信建设,是提高我国电信融资的一种有效方式。本文将在分析电信基础设施特征、政策环境、实践经验和电信融资需求的基础上提出公私合作制（PPP）在我国电信融资中的应用思路,完善法律法规,选择合适的PPP类型,并通过设计合理的定价机制和风险分担机制来推进PPP模式在我国电信融资中的应用。     

Changes in the Public Accounts Committee of a Less Developed Democratic Country: A Field Study

This paper complements prior studies on the public accounts committees (PACs) by considering the notions of ‘agency’ and ‘structure’ of institutional theory in tandem in understanding the changes in structures and activities of the PAC of a less‐developed democratic country – Bangladesh. While prior studies examined ‘external’ institutional pressures on the development and operation of the PAC in various settings, the role of internal and external institutional agents in this context has not been their primary focus. Our empirical evidence from a qualitative field study indicates that over the past two decades, Bangladesh's PAC underwent significant changes to its internal governance structures and administrative processes. While these changes were indirectly driven by pressures from international donor agencies, PAC members and the national audit office played a key role as institutional agents in initiating and institutionalising the changes in PAC governance and operation.     

The Allowance for Uncollectible Accounts,Conservatism, and Earnings Management

We study the interrelation between conservatism and earnings management by examining the allowance for uncollectible accounts and its income statement counterpart, bad debt expense. We find that the allowance is conservative and that it has become more conservative over time. Conservatism may, however, facilitate earnings management. We find that firms manage bad debt expense downward (and even record income‐increasing bad debt expense) to meet or beat analysts’ earnings forecasts and that conservatism accentuates the extent to which firms manage bad debt expense. Further, we find that firms manage bad debt expense downward by drawing down previously recorded over‐accruals of bad debt expense that have accumulated on the balance sheet. An implication of our study is that tighter limits on the amount by which firms are permitted to understate net assets may reduce their ability to manage earnings.     

大专公共英语教学的评估效应考察

对大专公共英语教学的评估涉及学生的成绩评定和教师的业绩评价两个方面,现行的评估办法未能充分保证测试和考评的信度,应在提高科学性、人文性和可操作性方面进一步完善大专公共英语教学的评估机制。     

城镇职工医疗保险个人账户制度起源的反思

本文从城镇职工医疗保险制度的实践历程、政策文件和文献资料的回顾三个方面进行分析,认为职工医疗保险个人账户制度产生于改革开放中主导的效率优先思想的宏观背景下,在没有理论、没有讨论也没有实践支持的情况下在行政力量推动下匆忙上马并固化。