Abstract
If we consider business forms from the point of view of satisfying needs, public companies are consumer companies that satisfy collective needs with the aim of redistributing income. They differ from production companies in that they do not have direct access to the market, so that the sources of financing derive from the taxes imposed by law, while the uses concern management costs, capital investments and debt repayments. Maintaining this interpretation, another category belonging to consumer companies is that of non-profit companies, which can be equated partially to public companies precisely because of the absence of a real market of reference and the finding of sources of funding for the performance of the activity mainly from external contributions without consideration. The only difference is inherent in the fact that such contributions cannot be imposed by law and are aimed at assisting and providing services and benefits to the community of reference, in the absence of profit and capital distribution. Therefore, if in the public sector performance is mainly and historically linked to the management of financial resources and public debt, in the field of nonprofit there is a different literature focused more on the control of economic aspects (and in particular the costs of the activity) as performance indicators of the company's activity. At the international level, and in particular in the United States, the use of the incidence of overheads is an element of examination to assess the performance of the non-profit sector. In this article, the subject of analysis is the possibility of using the overhead level to assess the performance of a public body. The analysis is carried out by comparing the incidence of overheads on the revenues of Italian municipalities in the years 2015-2017 with the performance indicators given by the deficit parameters established by current administrative legislation. From this analysis, it is possible to identify the presence of a correlation between the performance indicators and the incidence of overheads, in which the likelihood of the presence of “good”, “excellent” or “excellent” indicators is given by levels of overhead in the region of 10% of the total revenue assessed, with a margin of tolerance of 3% in positive for smaller entities (up to 5,000 inhabitants), and 3% in negative for larger entities.
Highlights
In the last two decades, the New Public Management wave has driven a shift in public sector accounting techniques to build the foundations of sustainable and inclusive societies (OECD 2015, 11)
While on the nonprofit sector side, revenues are provided by voluntary donors, who prefer non-strategic cost levels and overheads, on the public sector side, revenues are forcibly withdrawn from the population, which loses the possibility of evading the withdrawal of money if the non-strategic costs are too high
The analysis carried out shows that the level of overhead shows a correlation, not significant, with other performance indicators used to assess the performance of municipalities
Summary
In the last two decades, the New Public Management wave has driven a shift in public sector accounting techniques to build the foundations of sustainable and inclusive societies (OECD 2015, 11). This renewal had tried to go in the same direction in all countries, and in Europe, but with times and methods linked to the traditions of individual countries that have not always led to uniform results (Brusca et al, 2016). In Italy, this process of harmonization of public sector accounting began in 2011 with applications starting in 2013, becoming effective in 2018 This process aimed to make general government financial statements homogeneous, comparable, and available for aggregation and citizens' consideration. In light of this interpretative framework, this contribution is intended to verify whether overheads (intended as general and structure expenses ratio over total revenues or expenses) can be an immediate, easy, and sufficient indicator for measuring the level of efficiency of public administration spending
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