The result of administration and the fiscal year result: evidence from the accounting experimentation in Italian local authorities

The harmonization of the accounting systems and the public financial statements represents a necessity to achieve the coordination of public finance. This has as its main objective the improvement of the information provided to the stakeholders by accounting data regarding the public administration’s financial, economic and property management. The public administration’s accounting harmonization process and the necessity to have available a homogeneous set of information, able to provide comparable accounting data, can be fully considered as part of the process of “businessification” of the public sector known as New Public Management. Both EPSAS and IPSAS tend to attribute exclusive importance to accrual accounting. In Italy, the current accounting reform in Local Government places accrual accounting side by side with cash accounting for informative purposes, but the latter one remains the main accounting system for authorization purposes. To support gradualness of reform and evaluate on the field its possible effects, the legislator established a three-year pilot period of experimentation of the new accounting regulations in some local authorities, starting in 2012. With the analysis of the experimental financial statements, this work aims to investigate and compare the information value of two important results of local authorities’ management: the result of administration, i.e. the traditional summary value of the financial management of a local authority, and the fiscal year result, i.e. the new value that expresses the economic management of a local authority. Evidence demonstrates the importance of the analysis carried out with the combined use of data.