FINANCIAL ARCHITECTURE OF PUBLIC–PRIVATE PARTNERSHIPS: ACCOUNTING, BUDGETING, AND THEIR STRATEGIC ALIGNMENT
Abstract
The relevance of this study is driven by the increasing complexity of financial obligations within public-private partnership (PPP) arrangements and the need for strategic alignment between accounting and budgeting practices. As PPPs become more structurally sophisticated and financially layered, the ability of public entities to maintain oversight over contingent and deferred liabilities becomes critical for safeguarding public resources. The core idea of the research is the conceptualization of a financial architecture for PPPs as an integrated system that merges accounting and budgeting. This system aims to support balanced decision-making regarding resource allocation, risk distribution, and performance responsibility among the stakeholders. The study is grounded in the hypothesis that strategically aligned accounting and budgeting mechanisms do not merely support financial reporting but act as proactive instruments for enhancing project effectiveness. The study substantiates the conceptual model of PPPs financial architecture by establishing strategic coherence between accounting and budgeting processes across public and private partners. This alignment is analyzed with consideration of financial risks, long-term obligations and diverse managerial requirements specific to each stage of the PPPs. The role and functions of accounting and budgeting are examined in the context of their contribution to the supervision of PPPs. The research identifies the core issue of asynchrony between accounting and budgeting practices. To address these challenges, the paper proposes an original model of PPPs financial architecture. This model facilitates strategic integration between accounting and budgeting by embedding tools for adaptive planning, risk-based auditing, performance monitoring, and comprehensive financial reporting. By operationalizing these elements, the model facilitates the development of institutional mechanisms that enhance fiscal discipline, optimize resource management, and ensure equitable risk-sharing between partners.
References
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Amdar N., Seyoum S., Al-Bakri J., Rutten M., Jewitt G., Mul M. (2024) Developing a water budget for the Amman-Zarqa basin using water accounting plus and the pixel-based soil water balance model. Modeling Earth Systems and Environment, vol. 10, no. 6, pp. 6997–7017. DOI: 10.1007/s40808-024-02159-0.
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Corrigan L.T. (2016) Accounting practice and the historic turn: performing budget histories. Management and Organizational History, vol. 11, no. 2, pp. 77–98. DOI: 10.1080/17449359.2015.1115743.
Canestrini P., Galizzi G., Siboni B. (2025) Addressing gender (in)equality in the health sector: gender-responsive budgeting as an accounting process for creating public value. Journal of Public Budgeting, Accounting and Financial Management, vol. 37, no. 6, pp. 77–102. DOI: 10.1108/JPBAFM-07-2023-0130.
Chow D., Bracci E. (2020) Neoliberalism, accounting, and the transformation of subjectivities in social work: A study on the implementation of personal budgets. Financial Accountability and Management, vol. 36, no. 2, pp. 151–170. DOI: 10.1111/faam.12231.
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Anessi-Pessina E., Cantù E. (2024) Budgeting, Accounting, Reporting, and Their Reform in Italy. Governance and Public Management, part F4272, pp. 149–180. DOI: 10.1007/978-3-031-74615-4_9.
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Jing X., Tian G., Li M., Javeed S.A. (2021) Research on the spatial and temporal differences of China’s provincial carbon emissions and ecological compensation based on land carbon budget accounting. International Journal of Environmental Research and Public Health, vol. 18, no. 24, art. no. 12892. DOI: 10.3390/ijerph182412892.
Qu L., Wang Z., Sun C., Yin L. (2022) Application of ABB in environmental management accounting: Incorporating MFCA into the budget process. Frontiers in Environmental Science, vol. 10, art. no. 963903. DOI: 10.3389/fenvs.2022.963903.
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Sulindawati N.L.G.E., Wayan Lasmawan I., Nyoman Natajaya I., Adi Yuniarta G. (2021) An analysis of material need and development digital media in learning budgeting accounting study program Undiksha. ACM International Conference Proceeding Series, art. no. 61. DOI: 10.1145/3516875.3516948.
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