Accrual Accounting in Italian Local Governments in the Context of Public Sector Managerial Changes

This article focuses on the main reforms of accounting in Italian local governments within the context of international public management change. It traces the progressive introduction of accrual bookkeeping as a means of improving the decision-making process with the ultimate aim of improving efficiency, accountability and transparency. In Italy, local governments were the precursors of managerial changes in the public sector, and accounting innovations (starting in 1990) are still ongoing. A legislative decree of 1995 introduced accrual reporting in the traditional cash accounting as well as managerial control systems, whereas double-entry bookkeeping will be mandatory in 2014. Currently, budgetary accounting is still prepared on a cash and commitment basis, and the budget continues to play its central authorizing function in the accounting cycle in which accrual reporting has a marginal role. Accrual accounting is often considered a mere formal requirement; consequently, implementation of management by objectives is still largely elusive.