Italian Accounting System Case Study

A country’s accounting system is a reflection of a number of factors that encompass both its past and present. Italy is a great reflection of this as it once stood as a leader in the accounting world, but since that point has become a bit entangled in itself.

History

To understand the current state of Italy’s accounting system you should first look at it’s past to see how it has developed over the years. Italy’s first major advancement with accounting came in the 14th century when the country experienced large economic growth and had to evolve their accounting practices to effectively manage their increased business. The increase in trading to Europe meant that the old practices for merchants of keeping mental figures, or even basic ledgers, would not fully capture their financial situation; With this heavy demand in place double entry accounting formed sometime

Furthermore, the most important issue is the implementation of double-entry bookkeeping which was optional. This, according to Caperchione, could influence the government to stick on their tradition way of presenting information which would in turn affect international accounting systems.

According to Caperchione (2003) Italy has 8102 Local Governments (LGs) who set the accounting policies to be followed. This explains why there are some difficulties in standardizing their accounting systems and unable to record some transactions. As Caperchione (2003) says, for example, LGs hardly record “future expenses” on balance sheet or on income statement because they cannot differentiate whether they are liabilities or expenses.

A COMPARISON BETWEEN ITALIAN FINANCIAL STATEMENTS WITH