Research Updates

Towards accrual accounting in the public sector: Reforming education to facilitate change

In Italy, the current graduate, postgraduate, and executive offerings in public-sector accounting remain limited and likely insufficient to meet the knowledge demands required for professionals in the public sector. This gap, among other implications, may slow the transition to the accrual accounting system mandated by the PNRR (National Recovery and Resilience Plan, the Italian investment plan, part of Next Generation EU) by 2026.

 

And though, human capital is one of the pillars of the ongoing public sector reform, in terms of career paths and skills. The redesign of entry and advancement paths within the Public Administration impacts training, a topic that is often inflated and underused, and highlights the need to align content and approaches with evolving trends.

The questions

One of the enabling reforms of the PNRR, “Equipping Public Administrations with a unified accrual accounting system,” requires that by 2026, public entities adopt a unified accrual-based system to reduce the gap compared to European standards.

 

The shift from the current cash-based accounting, which emphasizes cash flow recording, to accrual accounting, which focuses on economic competence and records asset variations, is challenging but necessary. It will provide a complete and comprehensive picture of an entity’s performance and improve transparency and accountability within and between administrations. An accrual-based accounting system is also considered essential for achieving sustainable development goals.

 

Given this context, we asked ourselves whether the current educational offerings can adequately prepare today’s and future professionals for the impending and prospective scenarios. Specifically, our work aims to address three main questions:

 

1. Which universities offer public accounting courses in their undergraduate, postgraduate, and executive business programs?

2. To what extent do they cover key topics in the international debate on public accounting?

3. How do the teaching and research activities of faculty involved in public accounting courses relate to one another?

Fieldwork

Since 2021, as part of research conducted by the Government, Health, and Non-Profit Area of SDA Bocconi, we have mapped the public accounting educational offerings of Italian public and private universities. Our goal was to understand how evidence-based the master's degree courses and postgraduate and executive programs in business economics are, relative to the reference literature, and how practice-oriented they are for the challenges ahead.

 

To assess the alignment of the teachings with academic debate and the new needs of public administrations, we utilized Jens Heiling’s analysis from his 2020 article “Time to rethink public sector accounting education? A practitioner’s perspective.” In the article, Heiling identifies seven key topics that should be reconsidered in public sector accounting education. From a public professional’s perspective, these are the areas most in need of updating to meet ongoing reform processes:

 

1. Public Sector Accounting Standards

2. Management accounting

3. Government finance statistics

4. Consolidated financial statements

5. Non-financial reporting

6. Public-private partnership

7. Digitalization and open government

 

The resulting picture is disappointing, both quantitatively and qualitatively. At the master’s level, there are 42 courses available, while 44 public accounting courses exist at the postgraduate and executive levels. On average, universities offering courses in this area provide 1.4 courses at the undergraduate level and 1.6 at the postgraduate and executive levels, leaving students with limited choices and opportunities for deeper exploration.

 

The mapping also shows a geographic divide, especially at the undergraduate level, between the three main regions of Italy, with northern universities offering more courses. Public accounting also remains a “national” topic in education, as courses taught in English – accessible to non-Italian students – are rare at the undergraduate level (only 8 out of 42) and non-existent at the postgraduate and executive levels.

The content analysis of the courses, in relation to the international debate and key emerging topics from the literature, highlights a strong focus on public sector accounting standards and management accounting, long-standing academic and practical topics that blend traditional principles with regulatory evolution.

 

However, gaps remain, particularly at the undergraduate level, regarding government finance statistics and the timely topics of public-private partnerships. At the postgraduate and executive levels, the most notable gap in business and accounting disciplines pertains to digitalization and open government.

 

The research also revealed a significant disconnect between the advanced research conducted by faculty involved in public accounting education and the basic nature of the topics covered in their courses. Analyzing the publications from the past five years, we found that the professors involved in these courses are highly active on emerging issues, including digitalization and open government, demonstrating a constant focus on ongoing changes and potential future trajectories. However, this focus does not translate into equally advanced teaching content.

Looking ahead

The snapshot provided by this study highlights the shortcomings of the current educational offerings and the gap in transferring knowledge from researchers to public accounting education. It also calls for a reflection on the directionality of the link between theory and practice and the impact of education and research.

 

The theoretical reading of public sector evolution appears inadequate to guide the definition of knowledge needs in public administrations. Conversely, a purely practice-based approach risks promoting contingent methods and undermining the holistic vision needed to grasp the various nuances and implications of the ongoing reforms.

 

Amid these dilemmas, one clear fact stands out: many public entities’ budget officer positions remain unfilled or are filled by individuals lacking adequate skills.

 

Therefore, a possible future direction for our research is to analyze the relationship between the demand and supply of public accounting education at the undergraduate and postgraduate levels. To do so, we believe it is necessary to involve all key stakeholders in this value chain to map out specific competencies and training needs that align with current and future reform trajectories. This would also help strike the right balance between more theoretical and “generalist” education, aimed at understanding accounting dynamics in the public sector, and more practical and “customized” education tailored to the needs of individual administrations.

 

Silvia Rota, Camilla Falivena, Elisabetta Notarnicola, Mapping Public Sector Accounting Education in Italy: Current Landscape and Future Perspective, SDA Bocconi funded research.

SHARE ON