Recent advances in European accounting: The case of Italy

Following the implementation of Directive 2013/34/EU (hereafter the Directive), significant innovations have recently been introduced in the European Union countries to prepare the financial statements of non-listed companies. In Italy, the aforementioned Directive was implemented with Legislative Decree no. 139 of18/8/2015 and applies starting from the financial statements for the financial year 2016. Two years have passed since the first application and it is now possible to analyze the effects of this reform in the Italian context. The purpose of this study is to verify whether the aforementioned reform has brought real benefits, and especially if it has improved the information that can be obtained from the financial statement for decision-making by managers and stakeholders. Through this contribution, the reader can learn: a) the main rules for preparing the financial statements of Italian non-listed companies; b) improve reading and interpreting the financial statements of Italian companies. The method used is inductive-deductive and is based: i) on the analysis of the recent regulatory framework; ii) on the empirical survey, conducted on the financial statements of some nonlisted Italian companies, for the four-year period 2014-2017; iii) on the quantitative costbenefit analysis of the reformed rules. The findings of the research are the sequent. 1) The statement of cash flows, introduced in Italy for the first time by the Directive, provides summary information useful to the reader of the financial statements, but less useful to managers, for whom historical data are not sufficient, because they also need information to plan the future. 2) The evaluation criteria have been made more complex, but in the face of the increased technical and applicative difficulties, the benefit in terms of utility for managers and readers of the financial statement is not commensurate with the effort and resources required. 3) The quantitative survey led to a cost-benefit indicator generally not less than 1 [(C/B)≥1].