The Path toward Accrual Accounting in the Public Sector from the Perspective of Italian Municipalities

Abstract

The goal for the coming years set by the European Union to harmonize public sector accounting is to implement a single accrual-based accounting system for all public administrations. Italy is moving towards full adoption of this accounting system for all local authorities by 2026 and can be seen as an example of a country in transition from a modified cash accounting system to a full accrual accounting one. This research makes use of semi-structured interviews with key actors in the accounting departments of municipalities in Emilia-Romagna, one of the most economically developed regions in Italy, to assess whether the current public accounting system is ready to move to full accrual accounting and whether the transition would be considered beneficial for Italian municipalities. The results show that municipalities are still far from the full implementation of accrual accounting, both in terms of the maturity of the system and the usefulness of the information. The research contributes to understanding the level of accountingmaturity in the public sector and helps to identify the main critical issues for the full adoption of accrual accounting, finding new paths to be followed to make its implementation effective. At the international level, this work may be useful for all countries that are changing their accounting systems to understand what measures need to be taken to facilitate the transition to full accrual accounting in the public sector.