The announcement in the Budget in 2007 that Government would prepare its accounts using International Financial Reporting Standards (IFRS) from 2008-09 means that the Government Financial Reporting Manual (FReM) needed to contain guidance on how to account PPP arrangements under IFRS, since there is no specific PPP IFRS that is directly applicable to the public sector. This paper discusses how PFI contracts should be accounted for under IFRS.