The Result of Administration and the Fiscal Year Result: Evidence from the Accounting Experimentation in Italian Local Authorities


Purpose: this work aims to analyse the recent accounting reform introduced by means of a pilot project within the Italian local governments in order to investigate whether the implementation of the new accounting system, which flanks accrual to cash accounting, improves the information provided to managers and citizens, increasing transparency and accountability. Design/methodology/approach: a quantitative empirical analysis grounded on the examination of the experimental financial statements has been adopted. Findings: evidence provided by this paper demonstrate that the adoption of the new accounting regulations affects the financial statement making changes in numbers and that the adoption of the “enhanced” cash basis along with the introduction of accrual accounting, even if just for informative purposes, provides a more complete information on the use of the public resources. Research limitations/implications: this research focuses on the Italian public sector, analyzing the Italian accounting reform for local governments under a technical lens. Therefore, a more in depth analysis of the socio-political aspects of the reform should be carried out in order to reach more widely applicable conclusions. Even though it analyses a single-country case study, this paper can be of interest for an international audience in that it investigates how different results occur applying similar processes (such as the adoption of accrual accounting in the public sector) in different national contexts. Originality/value: analysing the combined adoption of the two accounting systems for the management of public resources (cash accounting and accrual accounting), this research represents a contribution towards (i) the implementation of European and International Accounting Standards (EPSAS and IPSAS), as the criticalities highlighted by the local authorities can be translated into suggestions for the elaboration of accounting standards; (ii) the identification of new elements and information useful for citizens and decision-makers.

Key-Words: Contabilità pubblica, local government, public sector accounting, reform, accrual accounting, cash accounting

Figure 1– Profitability indicators

Table 1 – Yearly variation (2013-2012 and 2014-2013) of the result of administration (RA) per municipality

Table 2 – Total available part of the result of administration (E) for the year per local authority

Table 3 – Composition of the result of administration

Table 4– Comparison between 2013 and 2014 fiscal year results

Table 5 – Matrix of the relationships between result of administration and fiscal year result (2013)

Table 6 – Matrix of the relationships between result of administration and fiscal year result (2014)