A Practical Guide to the Internal Audit of the Operational Phase of PFI Contracts

In 2011, the Treasury Select Committee concluded that private finance initiative (PFI) funding for new infrastructure, such as schools and hospitals, does not provide taxpayers with good value for money, and that stricter criteria should be introduced to govern its use.

Decisions made during the development and procurement phases of a PFI project clearly have long-term implications, which need to be fully assessed and evaluated by internal auditors.

Public sector organisations have a duty to exercise due probity and safeguard the taxpayer. Internal audit is a key component of any public sector organisation’s risk management strategy and as PFI projects involve identifying and managing significant amounts of risk, they should rate highly in any audit plan. The procedures for effectively managing PFI projects are onerous and carry a high risk and cost of failure, particularly if adequate controls are not built in from the outset.

Until now there has been a lack of guidance to assist public sector internal auditors in the audit of the operational phase of PFI projects. This publication bridges that gap.

It provides general background on areas relevant to the operational phase of a PFI project. It concentrates on the requisite control framework, profiling the risks and suggesting appropriate audit tests. As a practical aid, the publication is organised to be used as a toolkit that internal auditors can apply in whole or in part, depending on their individual needs.

This publication will also be of wider interest to PFI professionals as they carry out their responsibility to ensure that robust systems and processes are put in place, leading to the efficient delivery of PFI projects.

This publication is available in book and PDF formats.