Critical Evaluation and Appraisal of the P.F.I. and role of the Essay - 1

Critical Evaluation and Appraisal of the P.F.I. and role of the External Auditor in assessment of value for money - Essay Example The Private Finance Initiative grants private companies the right to design, finance, and manage the public facilities. The initiative favorably does not increase our nation’s national debt. In fact, the initiative did not form part of the total national debt calculation during 2005 and 2006 to comply with FRS 5 requirements. FRS 5 requires the Public Finance Initiatives are not shown as liabilities in the company’s financial statements (. There are advantages of the Public Finance Initiatives. The initiative contributes value for money to the government. Another advantage is the government’s not being required to borrow money or invest in the construction of public service facilities. The HM Treasury Department correctly affirms the Private Finance Initiative (PFI) was the best value for money procurement alternative, using private funds to implement government projects. One Liverpool City Council leader affirmed the Private Finance Initiative (PFI) provided the value for money source for the construction of the Royal Liverpool and Broadgreen University Hospitals. Professor Ron Hodges similarly agreed stating PFI may be the only available fund source with the government’s low budget constraints (Tyrie, 2011). There are disadvantages of the Public Finance Initiatives. One disadvantage is the increased risks. Another disadvantage is the possible mismanagement of the facilities, generating complaints from several sectors. In one situation, the NHS correctly selected two private firms’ bids for its 1999 - 2000 Public Finance Initiative projects. One of the bidders did not submit any bids. Consequently, the lone bidder increased its bid price by 33 percent. The absence of other bids persuaded the lone bidder to increase its bid price, monopolising the bid process (Corner, 2006). The Private Finance Initiative (PFI) correctly represents the government’s