FASB Task Force Approves Proposed Guidance on Infrastructure Deals
An update to U.S. GAAP could provide clearer guidance on certain agreements between government entities and private-sector businesses. On March 16, the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task Force (“EITF”) unanimously approved an amendment which covers deals involving a private organization that operates public infrastructure. The operator normally pays a fee to the government, and in turn receives all, or a part of, the revenues. In some arrangements, the government entity pays the private company to operate the facility but collects a portion of the proceeds.
The EITF-approved amendment is part of Proposed Accounting Standards Update No. EITF-16C Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services: A Consensus of the FASB Emerging Issues Task Force. With the final authority on whether the amendment will be updated to U.S. GAAP, the FASB plans meet next week to review the EITF’s decision.