The road construction market; The type of contract is a public-private service concession agreement. Scope: The agreement includes a private entity (an operator) that builds, operates and maintains the infrastructure. The operator is paid for his services during the period of the agreement. Such regulations are often referred to as the “Build-Operate Transfer,” “Rehabilitation Operating Transfer” or “Public-to-Private” service concession agreement. To be a service concession agreement, an agreement must include the use of infrastructure assets and the government must control both the terms of services provided by the use of infrastructure and the potential residual interests of the infrastructure at the end of the agreement. Over the past decade, U.S. public infrastructure spending has exceeded $400 billion per year1 and trends suggest that even greater investments will be needed to maintain and modernize the aging of airport roads, bridges, ports and infrastructure. As governments and public sector organizations look for ways to outsource expensive public services, they are increasingly turning to service concession agreements. Under a service concession agreement, a public body grants an operator the right (a concession) to exploit an infrastructure value and to collect and collect royalties (for example. B tolls).
Fees can be paid by users or directly by the government. The FASB has released the 2014-05 Accounting Standards Update (ASU) to provide accounting guidelines for service concession agreements. A service concession agreement is an agreement between a public investor and an operational entity under which the operating company operates the donor`s infrastructure. Airports, roads, bridges, tunnels, prisons and hospitals are examples of infrastructure that could be operated by an operational agency under a service concession agreement. The operator can also manage the infrastructure. The infrastructure can already be in place for the duration of the service concession agreement or be put in place by the management unit. If the infrastructure is already in place, the managers` organization may be required to make significant upgrades as part of the agreement. IFRIC Guide 12 Service Concession Arrangements In February 2011, Deloitte IFRIC`s IFRS Global Office published 12 service concession agreements – A pocket guide.
On 31 October 2011, the International Public Sector Accounting Standards Board (IPSASB) IPSAS 32 Service Concession Arrangements: Grantor, which aims to address the lack of international guidelines on how governments and other public sector bodies should notify their participation in service concession agreements, often used to build the infrastructure needed to maintain and improve critical public services.