The Treasury is set to release its interpretation of a controversial accounting ruling on private finance initiative projects.

The body’s ruling on how PFI is to be accounted for will be of wide interest throughout Whitehall and also in local government, as civil servants fret over the impact of PFI deals coming on balance sheet.

The International Financial Reporting Interpretations Committee issued an interpretation in 2006 on how to account for long-term projects supplied to government and the private sector.

It suggested that the current method for deciding the balance sheet position of assets ­ determined under Treasury rules as being where the risk lies ­ will change.

IFRIC 12 states that the deals should be on balance sheet where the public authority is the ‘service concession grantor’ ­ effectively saying that, given the service is their responsibility, it will have to be on their balance sheet.

But the abstruseness of the terms and the complication of the issue mean that the Treasury’s verdict on the matter is likely to be closely followed.

The Treasury recently announced that it would be publishing its opinion in December.

The moves will aim to introduce more certainty to the understanding of the contracts. Application in the public sector should see a majority of projects such as PFI deals, coming back onto government’s books, the government has admitted.

The Treasury is set to meet with the high-level group of accountants from both private and public sector who meet to advise it before a verdict is issued.

The Financial Reporting Advisory Board, as it is known, has already urged the government to drop its ‘risk’ assessment of PFI accounting after an exhaustive modelling process on the Home Office and NHS accounts, among others.