The Reform of the Italian Local Government Accounting System. A Critical Analysis

30 Pages Posted: 12 Feb 2002

See all articles by Eugenio Caperchione

Eugenio Caperchione

Università degli studi di Modena e Reggio Emilia

Date Written: January 2002


In 1995 the Italian Parliament passed a measure that introduced some significant innovations in the accounting system of Italian local governments.

According to their promoters, these innovations should have improved the overall quality of decisions and increased public efficiency, thanks to the availability of targeted and reliable economic information.

At the same time, Municipalities and Provinces should have implemented - in accordance with the trends currently emerging in the leading Western countries - an accrual-based accounting system, that should have led to assessing with fuller knowledge of the facts whether local governments are managed by considering intergenerational equity.

Today, six years after the introduction of the decree many expectations have been disappointed, while there is no proof of significant improvement - i) neither in the quality of economic information, ii) nor in the quality of the decisions taken by local governments.

This paper aims at documenting a series of elements of objective difficulty in the implementation of the 1995 reform, thereby discussing their possible causes and feasible solutions.

To this end, the paper provides some data about the framework of Italian local governments and then briefly examines the reasons behind the 1995 reform.

The paper then moves on to illustrate the contents of the reform, thereby chiefly dwelling upon the introduction of accrual-based financial reporting.

It finally focuses on a sample of 23 local governments that produced these reports for the first time in 1998, and highlights a series of problems that emerged with regard to both communicational efficacy and fair presentation.

The conclusions summarize the major gaps between the reform's objectives and actual effects, and tries to grasp the reasons for these gaps and formulate some suggestions in order to re-design the system.

Keywords: Italy, public sector accounting, reform design & implementation, accountability, financial reporting

JEL Classification: H72, M41, M48

Suggested Citation

Caperchione, Eugenio, The Reform of the Italian Local Government Accounting System. A Critical Analysis (January 2002). Available at SSRN: or

Eugenio Caperchione (Contact Author)

Università degli studi di Modena e Reggio Emilia ( email )

Dipartimento di Economia Aziendale
Viale Berengario 51
Modena, 41121
+39 059 2056911 (Phone)

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