The Italian government is working towards implementing accrual-based accounting across all levels and sectors of government according to the EU Council Directive 2011/85. At the national level, Law 196/2009 introduced accrual accounting for informational purposes. To implement these laws, the Ministry of Finance established working groups for each sector that developed different accrual systems. In response, another working group was formed between the Ministry of Finance and academics to analyze compliance with the EU directive and identify changes needed to converge Italian systems with International Public Sector Accounting Standards on an accrual basis. The working group's tasks included analyzing differences between traditional and accrual accounting, describing an IPSAS-based system, and making recommendations to harmonize Italian systems. P

1. 1
The Italian path towards accrual accounting
Pier Paolo Italia
Fabrizio Mocavini

2. 2
LEGISLATIVE FRAMEWORK
National level: Law 196/2009 reform of public acconting
and finance
….. introducing the general accounting (accrual) ONLY for informative purpose….
European Level: Council Directive 2011/85 EU on
requirements for budgetary frameworks of the Member
States
…………public accounting systems covering all sub-sectors of general government and
containing the information needed to generate accrual data (Article 3 of the Council
Directive 2011/85/EU) ……….
……… the Commission shall assess the suitability of the International Public Sector
Accounting Standards for the Member States (Article 16 of the Council Directive
2011/85/EU) ……….

3. 3
IMPLEMENTATION of Law 196/2009
For the implementation of law 196/2009 the Italian MoF
has been established several working groups (State, Local
Governments, other bodies) in order to create/review
accrual accounting systems for each sector. ……..
But …several WGs … different minds … different results

4. 4
IMPLEMENTATION of Council Directive 2011/85/EU
The Italian Ministry of Economy and Finance (State General
Accounting Department) established a working group to analyse
the current Italian accounting legislation (also with a view to
complete the accounting harmonization provided for by the
Laws No 196/2009 and 42/2009) with regard to its compliance
with the new public accounting structure required by the
European Union to the Member States (Council Directive
2011/85/EU and guidance from the Working Group EPSAS of
Eurostat)
… WG members = ACADEMICS …WHY ? … It is important to have an independent view

5. 5
TASKS of WG 1/2
• analysis of the different objectives of traditional financial
accounting (based on legal commitments) and accrual
accounting;
• presentation of the European Commission mandate to
Eurostat to apply the Council Directive 2011/85/EU with
regard to the implementation of an accrual accounting
system on an IPSAS basis;
• description of an accrual accounting system on an IPSAS basis:
budget formats, assessment criteria, recognition rules,
implications for the chart of accounts
• scouting and in-depth analysis of the different kinds of accrual
accounting systems currently used by the Italian general
governments with reference to budget formats, assessment
criteria and administrative facts recognition principles, as well
as the links with financial accounting and chart of accounts

6. 6
TASKS of WG 2/2
• analysis of divergence between the accounting systems in use
in the Italian general government and an accrual accounting
system on an IPSAS basis
• identification of the main areas of intervention (critical areas)
in order to eliminate differences between the systems with a
view to converge towards a system on an IPSAS basis: budget
formats, assessment criteria, administrative facts recognition
principles, chart of accounts
• making recommendations in terms of regulatory measures
and operational guidelines necessary for the harmonization

7. 7
FIRST RESULTS OF THE ANALYSIS
CENTRAL GOVERNMENT LEVEL analytical cost accounting
system: it introduces a «cost culture», but due to its nature
considers only one element of accrual accounting, costs, and not
the others: revenues, assets and liabilities.
LOCAL GOVERNMENTS predominance of the traditional financial
accounting which generates accrual accounting, with distorsions
as a result.
SOCIAL SECURITY INSTITUTE better situation even if it has to be
accepted the correlation between payment order and cost.

8. 8
Thanks for your attention