GRAP 32 - Service concession arrangements

CPD hours:  1

Imagine a public sector entity preparing its annual financial statements. Beyond simply listing assets and liabilities, it needs to give stakeholders a clear picture of how infrastructure and service arrangements are managed and accounted for. This is where GRAP 32 comes into play.

GRAP 32 provides the framework for recognising, measuring, and disclosing service concession arrangements where the public sector entity (the grantor) controls the infrastructure. It ensures that these arrangements—such as public-private partnerships for roads, hospitals, or water systems—are accounted for in a consistent and transparent way, allowing users of the financial statements to understand how the entity’s service delivery obligations and infrastructure resources are managed.

For example, a municipality may grant a private company the right to operate and maintain a toll road. GRAP 32 guides how the infrastructure and related obligations are recognised, measured, and disclosed, ensuring transparency in both the value of the asset and the liability incurred. This enables decision-makers, oversight bodies, and the public to assess the entity’s management of its service concessions and its impact on future service delivery.

By standardising how service concession arrangements are presented, GRAP 32 supports accountability, enhances financial planning, and enables informed decision-making. It is not just about tracking infrastructure; it is about providing a clear view of the entity’s ability to deliver services, meet obligations, and manage public resources responsibly for the benefit of the community.