One of my positions with the federal government dealt with the oversight of several different types of P3s. One of the most difficult parts of the job was understanding and quantifying the in-kind benefits. P3 transactions are very complicated contractual agreements, where each party provides a different contribution and shares a portion of the risk. Each contribution and benefit has to be quantified, typically in dollar value. Then for each project risk, performance and benefits must be measured and reported. Thinking through the end-to-end transactions of P3s is hard, documenting them is harder, and explaining to the public why they are good is nearly impossible. Why is that?
Trying to distill complicated information into a sound bite is always hard — with P3 the addition of multiple parties trying to “spin” the situation to appeal to their stakeholders makes it doubly difficult. If that’s the case, why pursue P3s at all? In most cases, it’s all about the money. Gone are the days when the government was the Big Kahuna. Without the cash and recent downgrades in credit ratings, governments must pursue partners for large infrastructure projects.
Arguments are often made that governments are wasting taxpayer money on P3 deals. The project needs to get done for health, safety, quality of life, or insert your personal belief here; however, no one wants taxes raised. It really comes down to balancing government revenue and government costs with inherently governmental activities. The definition of inherently governmental activities has changed in recent years. The tides have definitely turned on raising government revenues, and no one has tackled costs….yet. (Stay tuned for my next blog on budgeting and accountability.)
So as government auditors, how do we add value to the conversation? First we need a clearer understanding of P3s and the governing accounting standards. As government auditors, we are the watchdogs over these partnerships. Oversight will almost always involve key measurement and recognition issues. As a trusted advisor, we help our organization find better ways to measure performance, benefits, and public stewardship. As a watchdog, we help the public understand how P3s are a good use of public money, reduce risk, and improve infrastructure.
Writer:
Mara Ash, CIA, CGAP, CGFM, CRMA, is a federal compliance specialist whose career has spanned federal, state, and local governments as well as private industry. Her goal is to help organizations improve service delivery, ensure compliance, and enhance transparency. She is an active member of The IIA and the Association of Government Accountants, where she has held various leadership positions. - See more at: https://acga.theiia.org/blogs/2016/Pages/public-private-partnership-p3.aspx#sthash.j4h8vWQa.dpuf
Mara
Ash, CIA, CGAP, CGFM, CRMA, is a federal compliance specialist whose
career has spanned federal, state, and local governments as well as
private industry. Her goal is to help organizations improve service
delivery, ensure compliance, and enhance transparency. She is an active
member of The IIA and the Association of Government Accountants, where
she has held various leadership positions. - See more at:
https://acga.theiia.org/blogs/2016/Pages/public-private-partnership-p3.aspx#sthash.j4h8vWQa.dpuf
