Until recently, Italy has experienced strong inertia in relation to the process of convergence towards international accounting principles. When in 2000 the European Commission announced its intention to require firms to use International Accounting Standards (IAS), now known as International Financial Reporting Standards (IFRS) for the group accounts of all firms listed on the stock exchanges within the European Union from January 2005, Italy faced difficulties in managing the harmonization process, as 1) the Italian accounting practice and philosophy differed deeply from the ones proposed by the International Accounting Standards Board (IASB), in that Italian standards were mainly government driven, tax dominated and code based ; 2) the former national standard setter, the Commissione Paritetica per la Statuizione dei Principi Contabili (Joint Commission for the Adoption of Accounting Principles), was not regarded as legitimate among all subjects potentially interested in financial reporting; and 3) Italy played a marginal role in the international standard setting context, having participated in only four of the 46 IASC’s Technical Steering Committees from 1973 to 1989. Yet, since 2000, Italy has undergone an impressive acceleration of the convergence process towards IAS/IFRS. This is due primarily to the foundation of a national standard setter, the OIC (Organismo Italiano di Contabilità). The OIC has contributed significantly to the definition of challenging objectives and of the boundaries and contents of the process, having achieved a high institutional legitimacy thanks to a clear mission, its governance and the opportunity for interested parties to be involved in the standard setting process. It is worth noting that, following the national legislator’s orientation, Italian firms will probably adopt different sets of accounting principles. Large, international firms with financial instruments distributed among the public will probably adopt IAS/IFRS for their financial accounts, either as obliged to or on a voluntary basis. Small and medium non-listed firms will possibly use national accounting principles for their financial accounts and will choose - where possible - between ‘traditional’ and ‘harmonized’ options, the latter resulting from national compliance with the Directive 2003/51/EC .
The role of National Standard Setters in the Standard developing Process: the Italian Experience
PROVASOLI, ANGELO;MAZZOLA, PIETRO;POZZA, LORENZO
2007
Abstract
Until recently, Italy has experienced strong inertia in relation to the process of convergence towards international accounting principles. When in 2000 the European Commission announced its intention to require firms to use International Accounting Standards (IAS), now known as International Financial Reporting Standards (IFRS) for the group accounts of all firms listed on the stock exchanges within the European Union from January 2005, Italy faced difficulties in managing the harmonization process, as 1) the Italian accounting practice and philosophy differed deeply from the ones proposed by the International Accounting Standards Board (IASB), in that Italian standards were mainly government driven, tax dominated and code based ; 2) the former national standard setter, the Commissione Paritetica per la Statuizione dei Principi Contabili (Joint Commission for the Adoption of Accounting Principles), was not regarded as legitimate among all subjects potentially interested in financial reporting; and 3) Italy played a marginal role in the international standard setting context, having participated in only four of the 46 IASC’s Technical Steering Committees from 1973 to 1989. Yet, since 2000, Italy has undergone an impressive acceleration of the convergence process towards IAS/IFRS. This is due primarily to the foundation of a national standard setter, the OIC (Organismo Italiano di Contabilità). The OIC has contributed significantly to the definition of challenging objectives and of the boundaries and contents of the process, having achieved a high institutional legitimacy thanks to a clear mission, its governance and the opportunity for interested parties to be involved in the standard setting process. It is worth noting that, following the national legislator’s orientation, Italian firms will probably adopt different sets of accounting principles. Large, international firms with financial instruments distributed among the public will probably adopt IAS/IFRS for their financial accounts, either as obliged to or on a voluntary basis. Small and medium non-listed firms will possibly use national accounting principles for their financial accounts and will choose - where possible - between ‘traditional’ and ‘harmonized’ options, the latter resulting from national compliance with the Directive 2003/51/EC .
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