Effects of Budgetary and Accruals accounting coexistence: Evidence from Italian Local Governments

Over the last decade, many countries have introduced accruals accounting at one or more levels of government, as a component of wider public-sector reforms. In the literature, the introduction of accruals accounting has been the subject of significant debate. Supporters have emphasised its ability to better meet user needs and its consistency with the overall shift from ex-ante constraints to ex-post accountability. Critics have raised both theoretical and practical objections. At first sight, an appealing compromise would be for accruals accounting to coexist with traditional, cash- or commitment-based budgetary accounting, letting governments reap the benefits of ‘both worlds’. This compromise is being increasingly discussed among academics, professionals and policy-makers, but empirical evidence is still scarce. This paper draws from the experience of Italian Local Governments (LGs) to empirically analyse the effects of such coexistence.