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Reforms and Investments

Implementation of the accrual accounting reform in the public sector fixed assets area in Italy

Supporting reforms to ensure efficient and effective revenue administration and public financial management

Funding Programme
Year
  • 2022

Implementation of the accrual accounting reform in the public sector fixed assets area in Italy

The project was situated within the broader public accounts reform aimed at implementing accrual accounting across all public accounts. SG REFORM supported the Italian MEF-RGS by analyzing fixed public asset management, reporting on future measurement criteria, conducting a pilot management system test, providing strategic recommendations with an action plan, and delivering capacity-building training to the Italian administration.

Context

This project aimed to support Italian Public Administrations in transitioning to accrual-based accounting, focusing on managing and reporting tangible fixed assets. The shift began with EU Directive No. 85/2011, which requires accrual financial reporting to improve decision-making and control public deficits per the TFEU. This mandate was incorporated into Italy’s 2021 National Recovery and Resilience Plan (NRRP) under Mission 1, Reform 1.15, promoting a unified accrual accounting system. Implementation responsibility lies with the Governance Structure, established by Resolution No. 35518/2020 and supported by Decree-Law No. 152/2021, tasked with developing the Conceptual Framework and Italian Accounting Standards (ITAS).

Support delivered

The project supported Italian Public Administrations by developing and implementing innovative accrual-based accounting tools tailored to the transition from cash to accrual systems, particularly for managing public fixed assets. It introduced tools like a minimum set of inventory attributes and a checklist for asset recognition to improve financial reporting accuracy and consistency, aligned with ITAS 4 standards. Additionally, the project facilitated active engagement of public entities through workshops and collaborative working groups, enabling dialogue and collaboration to align financial management practices with accrual accounting requirements, thereby enhancing transparency and reliability in public sector financial statements.

Results achieved

The overall results of the project highlight significant advancements made in the development and testing of accrual-based accounting practices, tailored to the specific needs of Italian PAs. Through the implementation of tools such as the minimum set of inventory attributes and the checklist for fixed assets’ recognition, the project aimed to improve the accuracy in the accounting management and reporting of tangible fixed assets. Additionally, the integration of these tools has promoted a more systematic approach to asset valuation, depreciation, and lifecycle management.

More about the project

You can read the documents related to the project here: