Financial Reporting Management Essay

Financial Reporting Management

Topic 1: What is government's accountability within Public-Private Partnerships (PPP) projects

Introduction

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“Public-Private Partnerships (PPP) projects” can be defined as projects that take place in partnership between the public sector and private sector for a particular purpose which includes proper delivery of projects as well as services by the public sector. PPP mainly involves taxes as well as other operating revenue along with significant protection from overwhelmed liabilities, and partial ownership rights across public services which are nominal in nature. The purpose of the essay is to highlight the context of the chosen topic which reflects the accountability factor of Government within “Public-private partnership projects” as Governments mediate projects effectively for ensuring successful completion.  In addition, summarising key findings which have been gathered by exploring key fundamentals based on topic-relevant aspects has been presented in a mannered way. Debate has been presented in this essay based on identifying the government’s accountability within PPP projects.  Highlighting the government’s supporting project activities which are done under PPP has been done following a systematic critical approach. 

Defining and explaining key concepts applied in the chosen topic

“Public-private Partnership” is mainly considered as effective to use for delivering infrastructure projects. As reported by Wu et al. (2016), on account of having limited a  public budget, the Government has become involved with significant private entities extensively for developing infrastructures. Besides, various projects under PPP consideration have already taken place in underdeveloped as well as developed countries which reflects active accountability factors associated with the role played by the Government.  It has been also reported that delivery of the project at the partial completion stage as well as at fully completed stages has been done by contracting “Special Purpose Vehicles (SPVs)” which includes fundamental of designing, building as well as financing project, operating and maintaining project associated activities along with public asset while Government remains accountable for providing desired services. 

Apart from these, it is also evident that “s corporate governance mechanisms” significantly aim towards ensuring financial accountability of projects when they run under long-term “Public–Private Partnership (PPP) contracts”, particularly in Britain. As per the opinion of Stafford and Stapleton (2017), a set of “corporate governance arrangements” are mainly driven for project completion from the private sector and in the account of adopting “private sector financial reporting” by “British Treasury” influence downplay of the fundamental concept of stewardship and probity. Besides, introduced policy named “Britain’s Public–Private Partnerships (PPPs) Policy” in the 1990s which aimed at opening the scope to use public expenditure by the private sector in managing project-associated activities.  In this case, active involvement of the private sector has taken place in Government’s decisions. It has been also reported that 10% of the total Government’s capital investment is privately financed and at same time 80% of newly developed economic infrastructure mainly requires partly financed by the private sector (Stafford and Stapleton, 2017). There are approximately 728 current projects which have been estimated at £56.5bn by all total capital value have been privately financed in Britain. 

In the UK, three projects under PPP financed worth £30bn have collapsed and a few projects have been reported as terminated. As reported by Popova et al. (2020), risks for performing projects under PPP contracts include significant technical defects, the inability of meeting required quality standards and the most impactful risk named cost overruns. This particular partnership approach was mainly criticised due to less transparent lines between public purposes and perceived exploration of the potential public. On the other hand, it has been highlighted that PPPs are considered a pathway for generating technology and innovative concepts as well as practices by the private sector towards providing better public services. In this way, improving the operational efficiency of completing projects has taken place successfully. 

Critically discussing the chosen topic

Allowing shared risk allocation facilities by conducting projects under PPPs mainly helps in taking on fewer risks associated with cost overrun projects as well as policy and legislative risks. As per the views of Wu et al. (2016), accountability can be considered as specific answerability for a particular performance. Public sector accountability mainly underpins significant vertical relationships including “politician-official” as well as “elector-politician” and “supervisor-subordinate relationship”. On the contrary, Tallaki and Bracci (2021), have reported that the government is considered accountable for maintaining quality as well as the effective utility of services which is considered important for creating future project scopes as well as managing the current state of projects under PPPs. Sufficient expertise needs to be retained effectively by Governments despite the existence of implementing agencies or regulatory agencies considering activities. Opposing the previously presented point of view of the author, the proclamation of the author Palaco et al. (2019), represents identifying all types of possible contingencies during essential project development as well as events including chances of occurring issues are also considered under the accountability of the Government when projects are long-term by nature.  It is also contraindicated that changing intermediate policies associated with projects during execution impacts project performance for which Governmental activities are considered highly accountable.

Following a transparent regulatory and legal framework is highly required for managing projects effectively and at the same time for lacking transparency in project activities, the Government is considered accountable as the legal framework is completely controlled by the Governmental departments. As reported by Stafford and Stapleton (2017),  the public sector mainly includes a wide range of social as well as economic and political environmental objectives, and meeting them properly operating projects in a sustainable way is considered one of the major accountability of the Government. Furthermore, the Government is also considered accountable for the well-being of citizens in times of engaging the private sector towards serving project essentials in the public sector. On the contrary Chima and Kasim (2018), have reported fulfilling significant deficits in infrastructure funding which are currently taking place in developing countries are mainly considered as one of the accountabilities of the Government. “Public-Private Partnership (PPP)” is an alternative solution for fulfilling governmental accountability by allowing the effective provision of services as well as goods which cannot be fulfilled in account of Governmental budget constraints.   

Apart from all of these, the Government’s accountability factors in PPPs in terms of incentivising the private sector towards delivering projects within stipulated time along with specific budget limits has been reported. As per the views of Tshehla (2018), not only strengthening economic stability but also managing multiple projects at the same time has been able to be done by the Government focusing on executing projects under PPP contracts.  PPP units as part of a Government need to enable significant authorities in order to create as well as manage and evaluate project execution effectively and efficiently under PPP contracts.  

Summarise key findings of the article

Hence it can be summarised that Government mainly conducts projects under PPPs which cannot be fully financially expanded by the Governmental budget allocation process. Wu et al. (2016) have revealed that projects under PPPs mainly provide significant opportunities for the government to share chances of occurring risks within projects. On the other hand, a critical review made in the above section reveals that the government is considered accountable for maintaining quality as well as the effective utility of services which support further creation of project scope and indirectly contribute towards strengthening the nation's economy Palaco et al. (2019). Long-term projects consist of major contingencies in terms of facing financial risks which impact the proper execution of projects. 

It can be summarized that the inclusion of non-government parties in PPPs can be considered a consortium of project-associated contractors and investors (Mulyani, 2021). On the other hand, it has come into an observation that broad project scope e as well as prolonged project execution requires good governance practices which can be acquired through project5 execution under PPPs. As per the study findings presented by Tallaki and Bracci (2021), interlinking funding activities are allowed for projects conducted under a “Public-private Partnership”.  It has been also presented that the creation of a good project governance system is one of the accountabilities of the Government which is mainly done with the help of following a self-regulating network while executing projects under the PPP approach. 

Conclusion

Hence, it can be concluded that a “Public-private Partnership” can be presented as significant cooperation between public as well as private parties within a specific time period that refers to project execution duration. On the other hand, it can be concluded that the perception of social governance mainly helps in distinguishing between the government and private sector involvement in the project execution process. In addition, the efficiency of using public resources needs to be taken under the accountability of the Government in order to ensure and enhance the success factors of projects. Besides, Governments of significant project under PPPs is considered accountable for satisfying the general population as well as asset end-users by ensuring the proper provision of expected quality services as well as efficient consumption of public resources. Thus it can be concluded that Government is highly accountable for managing project growth in “Public-private Partnership”.

References

Chima, P. and Kasim, U., 2018. Public-private partnership as a strategy for e-governance funding in Africa: The gains and the pains. International Journal of Public Policy and Administration Research, 5(2), pp.37-47.

Mulyani, S., 2021. Critical success factors in public-private partnership. Journal of Accounting Auditing and Business-Vol, 4(1).

Palaco, I., Park, M.J., Kim, S.K. and Rho, J.J., 2019. Public–private partnerships for e-government in developing countries: An early stage assessment framework. Evaluation and Program Planning, 72, pp.205-218.

Popova, T., Iskiv, M., Zagurska-Antoniuk, V., Buryk, Z., Matsyk, V. and Terentieva, N., 2020. The application of public-private partnership to implement state policy in the sphere of health care. International Journal of Economics and Business Administration, 8(3), pp.128-138.

Stafford, A. and Stapleton, P., 2017. Examining the use of corporate governance mechanisms in public-private partnerships: Why do they not deliver public accountability?. Australian Journal of Public Administration, 76(3), pp.378-391.

Tallaki, M. and Bracci, E., 2021. Risk allocation, transfer and management in public–private partnership and private finance initiatives: a systematic literature review. International Journal of Public Sector Management.

Tshehla, M.F., 2018. Constraints for the successful implementation of public-private partnership (ppp) for tourism infrastructure projects. African Journal of Hospitality, Tourism, and Leisure, 7(4), pp.1-10.

Wu, J., Liu, J., Jin, x. and Sing, M.C., 2016. Government accountability within infrastructure public-private partnerships. International Journal of project management, 34(8), Pp.1471-1478.