Theoretical framework on Public Private Partnership and Service Concession Arrangement, before and after

Additionally, by aggregating the identified PPP 18 sectors into three main groups of interventions, we see an increasing emphasis on urban regeneration, meaning the set of regeneration interventions on built space, functional to improve the quality of life². It is a market sector, triggered mainly by municipalities, which approximately represented 70% of demand and 17% of the total business volume between 2002 and 2012, and it was the only sector with a total positive balance sheet in 2012. Basic service sectors (transportation, health and education and social) and essential service sectors (water, energy, lighting, cemetery services, waste disposal) were the main sectors with reference to revenues, but during the last year these sectors registered a decline in the amounts linked to tender notices.

However, subsequent to the introduction of new stringent budgetary constraints, the respect of general government budgetary balances (Stability Pact in EU countries), and the increasing scarcity of resources, worsened by the financial crisis, in some countries, over the past twenty years, (Borgonovi, 2005, 2006, 2009; Amatucci, Vecchi 2009, 2011), governments have introduced (as shown in the following table), public-private partnership (PPP), through contractual service arrangements (Robinson 2001; Hawksworth, 2001), in order to attract private sector participation in the development, financing, operation and maintenance of works and utilities (Laghi, 2010), even to keep their rising debt under control (Broadbent, 2001; (Broadbent, 2001; Broadbent, Laughlin, 1999, 2002, 2004; Ricci, 2005; Eurostat, 2004).

The agreements regulating the different concession services in the recurring form of PPP (Parker, Gould, 1999; Pisani, 2001; Grimsey, Lewis, 2005; Guthrie, 2005), fall within the scope of IFRIC 12 (Campra, 2012: 2675) and the different accounting treatment of the operator’s rights on infrastructure, depending on the different tasks of control and regulation to be provided to the public on behalf of the public sector in accordance with the terms specified in the contract for a specified period of time (Hall, 2008), and on the identification and detection of the party on whom demand risk stays (Campra, Faraudello, Malfatti, Passarani, 2011),

The accounting treatment of "Service Concession Arrangements" (SCA), ruled by IFRIC 12, represents one of the most significant and emblematic cases of the application of the principle of the prevalence of substance over form (Meyer, 1976; Shere, 1986; Adwinckle, 1987), to highlight "typical light and shade" of a principle which is the basis of IAS/IFRS accounting model (Laghi, Giornetti, 2009; Laghi, 2010). It is a significant case because it falls within the definition perimeter of the concession services (SCA), all forms of public-private partnership and Project financing, particularly focused and copiously considered and debated in the business literature over the past fifteen years (Vecchi, Amatucci, 2008).

In the following paragraphs, business literature on different forms of PPP and SCA before and after the adoption of IFRIC 12 will be separately analyzed and reclassified, in order to determine the contribution that IFRIC 12 interpretation produced in favour of the improvement of the conceptual vagueness characterizing such instruments even under an increasing normative isomorphism (DiMaggio, Powell, 1983, 1991; Sullivan, Skelcher, 2002; Dickinson, Glasby, 2010).
PPP, SCA: The theoretical Framework "before" the application of IFRIC 12
"Service Concession Arrangements" (SCAs) refer to those forms of PPP projects through which a public sector entity (grantor), entrusts to a private sector entity (operator), the concession to construct or to operate a public work or infrastructure, in order to perform a public service in the public interest, upon consideration, and resulting in deep functional privatization processes (Pivato, 1958; Amaduzzi, 1978: 227; Caramiello, 1988: 546; De Robertis, 1992; Guatri, 1992: 498; Kunz, 1997; Perfolini, 1999; Dell'Atti, 2001; Rijna, 2010). The operator’s consideration may consist in a right to charge users of the public services (intangible asset), or in an unconditional contractual right to receive cash or another financial asset (financial asset) from or at the direction of the grantor for the construction services (Campra, 2011; Laghi, 2010).

The following table reproduces the critical success factors regarding PPP, from an international literature view, prior to the adoption of IFRIC 12.