Disclosure of Information and Transparency in Public-private Partnerships: a Comparative Study Between Portugal and the UK

ABSTRACT

This paper studies the adequacy of financial and non-financial disclosures in the government’s consolidated annual report for political accountability of public-private partnerships (PPPs). The empirical evidence from the comparative study shows that neither the UK nor Portugal complies with the information needs of the parliament because several disclosures deemed necessary for the functioning of the political accountability relationship are missing. Furthermore, in the case of Portugal, resource dependence and coercive institutional pressures related to the financial bailout during the sovereign debt crisis justify the increase in the level of disclosures. Such evidence also suggests that a comprehensive external reporting framework for PPPs in their post-procurement phase should be devised. The results present novel evidence concerning public sector accounting comparative studies by focusing on specific transactions and may have important implications for policymakers regarding the design of the disclosures deemed necessary.

Keywords:

• accrual accounting
• annual report
• disclosures
• political accountability
• public-private partnerships

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 Private Finance Initiative (PFI) is an expression used in the UK to describe PPPs whereby the private sector designs, builds, finances and operates the assets, and the public sector pays to cover both the capital cost and services delivered by the private sector. At the end of the contract the asset is transferred to the public sector. In the literature (and also in this paper), PFI is used interchangeably with PPPs.

2 The announcement by the UK, in 2007, of IFRS adoption in the public sector was a consequence of New Public Management reforms in terms of accounting professionalisation (Connolly & Wall, 2012).

3 The accounts are available at: http://www.parlamento.pt/OrcamentoEstado/Paginas/ContaGeraldoEstado.aspx

4 The different FReM can be accessed here: https://www.gov.uk/government/collections/government-financial-reporting-manual-frem

5 The whole of UK government accounts (consolidated financial statements) are publicly available from: https://www.gov.uk/government/collections/whole-of-government-accounts

6 No later than one year, later than one year and no later than five years, and later than five years (HM Treasury, 2018, p. 140).

Additional information

Funding

Paulo Alves acknowledges financial support from Fundação para a Ciência e a Tecnologia: [Grant Number UIDB/00731/2020].