Scope of Public Private Partnership Audit
A contentious issue in the context of PPP arrangements and their audit relates to the scope of audit by Supreme Audit Institutions (SAI), in view of the following:
- The government or the public sector partner is usually only a minority partner /shareholder or will have only minority participation in the PPP arrangement, with the private sector partner controlling the majority stake.
- Most of the funds are brought in by the private sector partner.
- The construction, management and operational risks are transferred to the private sector partner.
- The data, records, analysis and the decision process of the government department / public sector agency to prefer the PPP route to execute the project instead of undertaking it directly.
- Documents and files leading to the formulation, appraisal and approval of the project.
- The process of identifying the private sector partner, requests for proposals, bidding and tendering process of the contract with due diligence to fairness, transparency and objectivity.
- In-depth analysis of the project documents including the shareholders’ agreement, concession agreement, operation and maintenance agreement etc., total project cost, financing arrangements (including cash flow, ROI / ERR / DCF), justification for the viability gap funding, contract period etc.
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