Auditors

public. This can be ensured through regulation, which is a fundamental component of infrastructure finance. Regulation depends on the risks apportioned between both the sectors.

Apportioning of risks between both sectors has developed and evolved over the years. At the time of the advent of public-private partnerships (PPPs) for infrastructure development, three areas of high risk were identified for the private sector with regards to highways and toll plazas. First, aggregating land for a project - for example, there have been instances where a road was constructed in intermittent parts because the private entity was not able to aggregate the land in question that may have belonged to a farmer. The government then decided to take it upon themselves to aggregate land for infrastructure projects. Second, handling political pressure In the year 2012 Raj Thackeray urged people not to pay toll tax in Maharashtra which panicked the private investors (Raja, 2012). Third, traffic forecast risk - In a scenario where a private investor has already built a bridge and started taking toll tax based on some traffic forecast, but some political party builds another bridge nearby which is free of cost, this results in diversion of all the traffic. Therefore the traffic forecast calculation done by the private investor does not hold true and they are at risk of not generating the required returns from that investment (Madan Malur, 2020).

Seeing these risks that the private investors took, the government regulated and introduced an annuity to be paid to the private entities. The government steps in and prevents the private entities to make more profit than what was decided in a contract (which happened in the case of DND- Delhi Noida Delhi Flyway as is mentioned further in the paper), therefore it is their responsibility to also ensure that the entity does not depend only on toll to recuperate the cost.

The amount of cash-flow in these large-scale projects is huge, and the confidence of creditors is generally based on the credit ratings given to these debtors and their audited balance sheets. The investors depend on the opinions provided by the auditors before making decisions regarding their investments in other companies. Hence, the auditors play a crucial role in the system of debt-financing.

Auditors

Auditors have to examine the financial transactions regularly to maintain the authenticity of the accounts, records, or books. The examination helps the auditors to give an opinion on whether the reports and documents are accurate or not and if they are free from all misstatements. Misstatements are possible when financial statements are inappropriate due to swindling of numbers or genuine error.

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