Cristian Carini

The Reporting Entity in Private-Public Accounting Harmonisation. Is Control Enough for the Local Government Consolidated Financial Statements?

The European Commission initiated a discussion on the expediency of using the International Public Sector Accounting Standards (IPSAS), based on the IAS/IFRS, as a common base for harmonizing the public sector accounting systems of the member states. However, literature suggests that accounting is not neutral with respect to the economic, social and political dimensions. In the perspective of evolution of the accounting regulation outlined, balanced between accountability, with the need to represent phenomena for reporting pur-poses, and decisionmaking issues, which concentrates on the quantitative importance of the values, the paper aims to analyse the effects of the application of different criteria for the definition of the reporting entity of the local government consolidated financial statements (CFS). The Italian PCA 4/4, the test of control and the financial accountability approaches are examined. The evidence that emerged from the case studies examined identifies several criticalities in the Italian PCA 4/4 and support the thesis that the financial accountability approach is more effective in providing a complete representation of the public resources entrusted to and managed by the group, whereas the control approach better approximates quantification of the group results in terms of central government surveillance. The analysis highlights the importance of the post implementation review period and the opportunity to contextualize the adoption of the consolidated financial statement in the broader spectrum of the accounting harmonization process, participating in the process of definition of the European Public Sector Accounting Standards (EPSAS).

Accounting Reform in Italy and Perceptions on the Local Government Consolidated Report

ABSTRACT The article aims to explore the perception of local government (LG) financial officers on the users, the uses, and the utility of the consolidated financial report in Italy, since it was one of the first countries to expressly provide for compulsory adoption. A questionnaire was sent to a statistical stratified sample of LG, collecting 133 responses (response rate 17%). The results, tested through the structural equation model we observe that social legitimization pressure rather than accountability patterns or performance analysis drive more the adoption process. The evidence indicates that the report is perceived as a potential tool for pursuing performance assessment strategies in a group context. However, this potentiality depends on the coordination effort made by the LG. The article finds out the rise of the topic of the public governance and the role of coordinating the local public group.

Trends in the Sustainability Reporting in Italian LGOs: Better Stick or Carrot?

The role of public-sector organizations (PSOs) for promoting the agenda of sustainability 10 accounting and accountability is often not adequately considered [1]. In the public sector universe, 11 Local Governments are close to their communities and thus have a particularly important role to 12 play in the pursuit of sustainability goals [2,3]. Hence, further research is still needed to understand 13 if Local Governments Organizations (LGOs) are still using reporting tools to promote sustainable 14 development. The empirical data show that the Sustainability Report (SR) is not having the spread 15 assumed in the past years; over time, the great majority of Italian Municipalities does not continue 16 or embark on a path of sustainability reporting. The findings suggest the fashion of SR in Italy is 17 falling and it seems that the SR tool is a “mere trend reporting based on descriptive indicators leads 18 to decreasing interest from internal and external audiences” [4]. The carrot is unsuccessful; maybe 19 the mandatory requirements could be a stick? 20

Impairment Test and Disclosure: An International Comparison

Introduction of the IAS/IFRS entails important changes for European companies, characterised by different accounting systems, including assessment and accounting of the impairment test which is one of the most fundamental issues. Our attention focuses on companies listed in the main European Stock Exchange Indexes (S&P/Mib, CAC 40 and FTSE 100) in which the impairment test is one of the most critical elements of company management. After a brief presentation of the main characteristics of the IAS 36, the aim of this paper is to study the effects of IAS 36 application on financial disclosure via an empirical analysis. The level of disclosure regarding the impairment test is compared among the three indexes and is studied in greater depth (69 items). In the paper the focus is on disclosure since, as the scholars also agree, financial communication does not represent a neutral process but affects the behaviour of the recipients, and consequently that of the prepares. Consolidated financial reports of 2006 and 2007 have been analysed: empirical results confirm that there are a lot of differences in disclosure level among the three countries and between companies with and without an impairment loss.

The Relationships between Annual and Ses Reports: An Empirical Analysis on the Petroleum Companies

This paper is based on the consideration that information asymmetry reduction is not only related to the increase of spread information (Verecchia, 2001; Healy et al., 2001; Peterson et al., 2006) but also to the improvement of clearness of information: the development of an effective communicative behaviour is linked to a good disclosure completeness and to an adequate organisation content of the information between the periodical reports.Empirical research emphasizes the importance of information increase, e.g. information on products, processes, strategies, risks, social-environmental impacts, intangibles assets (Botosan, 1997; Beattie et al., 2002; Beretta et al., 2004). As to this, in the last years focused reports on specific subjects have increasingly been made public: in this sustainability, environmental and social reports (SES) have played a very important part (Mazzoleni, 2004; Brammer et al., 2006). At the same time, content of the annual report has been extended by the introduction of disclosure about social, environmental and sustainability issues (Moneva et al., 2000; Di Piazza et al., 2002).In such a context, scarce attention was paid to the different reports’ integration. More disclosure could be positive for the reduction of information asymmetry but lack of integration between re-ports and information redundancy couldn’t be useful for the readers’ knowledge. SES reports can follow specific guidelines for their drafting; on the contrary the “soft” disclosure in the annual report isn’t regulated by a set of international principles. However, developments in annual report disclosure regulation have been including a part of information naturally located in SES reports. The lacking of coordination between SES guidelines and annul report drafting rules doesn’t lead to a problem solving.By means of a disclosure-scoring analysis (Robb et al., 2001; Vanstraelen et al., 2003; Beattie et al., 2004; Teodori et al., 2006), the aim of this paper is the analysis of the relationship between the content of the annual reports and of the SES reports. To quantify the degree of reports’ completeness and integration a composite unweighted index of disclosure has been established. Reports of year 2005 have been analysed.This paper particularly focuses on SES reports because of their large diffusion. Besides, SES reports include a wide range of information related to the whole company’s activities, investigating it according to social, environmental and financial points of view. To better understand the companies’ communicative behaviour and to improve the accuracy of the results a specific industry is selected. Extractive petroleum companies are analysed because of their relevant environmental and social impact. In addition to this, previous researches demonstrate that petroleum companies have transparent communication behaviour (FASB, 2001; PriceWater-houseCoopers, 2002; Quagli et al., 2005). Finally, there are specific guidelines for their SES reports’ drafting (IPIECA/API, 2005).Companies listed in NYSE, included in S&P 1200 and DJSTOXX 600 Indexes are selected to enable a worldwide disclosure behaviour analysis.The analysis will allow the identification of some communication models and will provide possible response in order to combine the need for more information with the communication tools’ integration.