IPSAS 32
Active
Service Concession Arrangements: Grantor
Prescribes the accounting by a public-sector grantor for service concession arrangements – how a grantor recognises and measures a service concession asset, the corresponding liability, and the two presentation models (financial-liability model and grantor-right model). Effective 1 January 2014. (No direct IAS/IFRS equivalent – IFRIC 12 underpins the economics.)
Active Standard
IPSAS 32 Service Concession Arrangements: Grantor is the current, active standard issued by the IPSASB for accounting by a public-sector grantor for service concession arrangements. Effective for periods beginning on or after 1 January 2014 (earlier application encouraged). Paras. 1–37.
IPSAS 32 has no direct IAS/IFRS equivalent (IFRIC 12 underpins the economics) – the public sector's 'grantor' framing and the two presentation models (financial-liability model and grantor-right model) are IPSAS-specific.
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Objective, Scope & Out-of-Scope Arrangements (paras. 1–7)
Grantor accounting (para. 1)
Prescribes how a public-sector GRANTOR accounts for a service concession arrangement where it transfers the right to use an asset (build, manage, operate or maintain) in return for a share of output or other considerations.
Grantor = public entityOut of scope: operator-only arrangementsPrivate finance initiative (PFI) carve-outApplies only if grantor retains control/rights
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Definitions – Grantor, Operator, Asset & Arrangement (para. 8)
Key terms (para. 8)
TermMeaning
GrantorPublic entity that grants the right to a service concession asset
OperatorParty that builds/manages/operates the asset
Service concession assetThe right to obtain use of the asset over the term
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Recognition of a Service Concession Asset – the Control Test (paras. 9–10)
Control test (para. 9)
The grantor recognises a service concession asset ONLY if it retains, throughout the term, the right to obtain the asset (or control of it) at the end. The test is whether the grantor will end with a right to use the asset.
Retained right to obtain assetControl of the asset at endOtherwise: recognise as revenue over time
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Initial Measurement & Reclassification of Existing Grantor Assets (paras. 11–13)
Value at transfer (para. 11)
The service concession asset is initially measured at the higher of (a) the fair value of the asset received and (b) the fair value of the consideration to which the grantor is entitled. Existing grantor assets reclassified into the concession are measured at fair value.
If the grantor receives no up-front consideration, the asset is recognised at the fair value of the obligation accepted.
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Recognition & Measurement of the Corresponding Liability (paras. 14–17)
The liability (para. 14)
The grantor recognises a liability for the present value of the obligation to transfer the asset at the end of the concession, the obligation to make payments to the operator, and any contingent consideration. Subsequent measurement: amortised cost (effective interest) until derecognised.
ComponentCarried as
Asset transfer obligationLiability – PV of asset
Payments to operatorLiability – PV of cash flows
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Financial Liability Model (paras. 18–23)
One model fits all (para. 18)
In the financial-liability model, the grantor recognises (a) a financial liability for the present value of the obligation to transfer the asset and the obligation to make payments, and (b) an asset for any consideration received. Revenue is recognised over the concession period using the effective interest method on the liability.
The grantor's obligation to transfer the asset at a future date is treated as a DEEMED financing – not current revenue.
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Grant of a Right to the Operator Model (paras. 24–26)
Two obligations (para. 24)
Where the grantor grants a right to the operator to use the asset, the grantor recognises a financial liability for the obligation to transfer the underlying asset and a separate liability for the obligation to make payments. The service concession asset is derecognised when control transfers back.
Financial liability – asset obligationFinancial liability – payment obligationService concession asset derecognised on transfer-back
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Dividing the Arrangement
Split when criteria differ (para. 27)
Where parts of the arrangement fall under different models (e.g., asset transfer under the financial-liability model and a grantor right under the operator model), the grantor accounts for each part separately using the relevant model.
Document the basis for the split and the measurement of each component.
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Other Liabilities, Commitments, Contingent Liabilities/Assets & Other Revenues (paras. 29–30)
Catch-all disclosures (para. 29)
ItemTreatment
CommitmentsDisclose nature & amount
Contingent liabilities/assetsIPSAS 19-style disclosure
Other revenuesFV of output share recognised over time
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Presentation & Disclosure (paras. 31–33)
On the face (para. 31)
The service concession asset is presented as a NON-CURRENT asset; the financial liability is presented on the face of the statement of financial position. Disclose the nature of the arrangement, the significant terms, and the sensitivity of the liability to changes in market rates.
Split presentation – asset and liability are NOT netted (offset only per IPSAS 28 criteria).
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Transitional Provisions, Effective Date & Amendment Timeline (paras. 34–37)
Timeline
DateEvent
Oct 2011Issued
1 Jan 2014Effective date
2017Amended (latest)
Transition: retrospective application with IPSAS 28 offset/disclosure alignment.
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Relationship to IFRIC 12
Economic twin (para. 38)
IPSAS 32 adopts IFRIC 12's grantor accounting but adds the public-sector control test and the two-model election. It diverges from IFRIC 12 on presentation of the financial liability and on the treatment of existing grantor assets.
IFRIC 12 control testIPSAS 32 grantor control testIFRIC 12 two modelsIPSAS 32 financial-liability / operator models
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Statement / Process Mapping
Where it flows
ProcessLedger
Concession assessmentProject Charter → control test
PV of obligationsTreasury → Financial Liabilities
Revenue recognitionFV of output share → Grant Receivable
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Related Standards – Cross-Reference Map
See also
StandardRelation
IPSAS 28Presentation of the financial liability
IPSAS 41Determining fair value of the asset/liability
IFRIC 12Economic underpinning
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Quick-Reference Glossary
Grantor
Public entity granting use of an asset in a service concession.
Operator
Party that builds/manages/operates the concession asset.
Service concession asset
Grantor's right to obtain the asset; measured at FV.
Control test
Grantor must retain right to obtain asset at end of term.
Financial liability model
Asset + liability measured at PV; revenue over time.
Operator model
Grantor grants a right to the operator to the asset.