Experts to create code for cross-border deals and to draw up global rules on revenue from PFI contracts.
British accountants are leading research into the creation of international regulations governing how PFI deals are treated in annual reports.

The Accounting Standards Board UK has been asked to propose a basis for an international PFI accounting standard. Contributions will be requested from regulators in Spain, France and Australia.

UK accounting regulations are to be replaced in 2005 by an international code for cross-border transactions. The International Accounting Standards Board has no regulations on PFI now, and its British counterpart has raised concerns that this might lead to problems for UK contractors and the government.

The UK's guidance on PFI is set up in FRS5, an accounting rule that will no longer have any force after 2005.

Paul Ebling, a project director at ASB UK, said: "We are looking to provide some sort of report to the international body by the first half of next year. We would hope it introduces a regulation because we don't want a gap to appear in UK accounting standards after 2005."

The board aims to decide when revenue from PFI contracts should be counted

One area the research is likely to throw light on is which projects should appear as assets on a contractor's balance sheet and which should be accounted for in the government's finances.

The complexities of PFI accounting has led to problems this year for support services group Amey. The firm changed the way it accounted for bid costs and future fee income.

The UK accounting board aims to solve one of the riddles posed by PFI and long-term contracts – when revenue ought to be included in the profit and loss account.

The regulator is considering whether it would be worthwhile introducing a regulation on the issue before the international standardisation. International and US regulators already have rules on how it should be dealt with.