Deloitte comment letter on service concessions

  • Deloitte Comment Letter Image

07 May 2005

We have submitted our comment letter on IFRIC's suite of three Draft Interpretations on Service Concession Arrangements.

Service concessions are arrangements whereby a government or other body grants contracts for the supply of public services, such as roads, energy distribution, prisons, or hospitals, to private operators. The draft interpretations establish two accounting models – the financial asset model and the intangible asset model. The appropriate model depends on whether the grantor or the users have the primary responsibility to pay the operator for the concession services. Click to download the (PDF 135k). Here is an excerpt:

With the benefit of hindsight, we believe that if this project were started from the beginning, it might be better suited to a Board project to develop an accounting standard. However, given the advanced stage of the project and the desperate need in the market place for these interpretations we believe the IFRIC should complete this project with all due haste.... We do have a number of pervasive concerns, which we believe are fundamental flaws in the accounting models proposed by the IFRIC.

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