Evolution of the substance over form principle in the Italian GAAP from a comparative and international perspective

Abstract

The informative power of financial reports is unanimously based, among others, on substance over form principle. But this principle is not free of ambiguous interpretation and adoption. In fact, it has been differently issued in the US GAAP, in the IAS/IFRS framework and in the Italian GAAP. This paper aims to provide a deep review of the recent reforms of Italian accounting regulation which introduced in 2003 and reaffirmed in 2015 the substance over form as an accounting principle within the law at the same level of accrual basis, prudence and going concern. We adopt a comparative approach to show how US GAAP, IFRS, UK GAAP already include substance over form principle and that the inclusion of this principle within the Italian law did not achieve its initial purpose. This is mainly due to the traditional legal view of a financial report intended by Italian legislator as a legal claim. Further research should be addressed in order to provide also empirical evidence of this mismatch.