Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p65
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 207170–210091

this time for an Australian Accounting Standard addressing grantor accounting for service concession arrangements.

     BC25            The Board discussed application of the concept of control in AASB 10 by analogous interpretation, and decided that the principles for assessing control of an entity may not necessarily be appropriate for assessing control of an individual asset.

     BC26            The Board concluded that the IPSAS 32 approach (the control or regulation approach) was the most appropriate approach as it is consistent with AASB Interpretation 12. Accordingly, this approach would lead to greater consistency in the accounting requirements for the operator and the grantor. The Board noted that this approach would require both the operator and the grantor under a service concession arrangement to apply the same principles in determining which party should recognise the asset in the arrangement. The Board considered that this approach would reduce the possibility of an asset being recognised by both parties, or by neither party to the arrangement.

     BC27            The Board noted that the IPSASB confirmed the control approach in IPSAS 32 in the Basis for Conclusions to The Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities (October 2014), where the IPSASB concluded that consideration of "the risks and rewards associated with particular transactions and events, and which party to any transaction or event bears the majority of those risks and rewards, may be relevant and useful in identifying the nature of the asset controlled by parties to the transaction or event. It may also be useful in determining how to quantify and associate the economic rights and obligations with particular parties. However, it is not of itself an indicator of the party that controls an asset. The IPSASB therefore decided not to include the risks and rewards of ownership as an indicator of control" (paragraph BC5.14).

     BC28            In considering the concept of control for the recognition of service concession assets, the Board decided that the grantor recognises an asset provided by the operator and an upgrade to or major component replacement of an existing asset of the grantor provided by the operator as a service concession asset if the grantor controls the asset. The grantor essentially controls the asset if the grantor satisfies the specific control criteria in paragraphs 5(a) and (b): the grantor "controls or regulates what services the operator must provide with the asset, to whom it must provide them, and at what price" and controls the residual value (if significant), thus controlling the asset for the majority of its economic life. This mirrors the control concept in AASB Interpretation 12. The Board noted that a broader concept of control currently applies in other Accounting Standards and that an asset that does not meet