New Public Management (NPM) and the Introduction of an Accrual Accounting System

In recent decades, the dissemination and the adoption of New Public Management (NPM) has been significant within the new public sector (Hood, 1991, 1995). The New Public Management is a model that privileges “quantification”, often by adopting managerial instruments from the private sector. Indeed, the main points of NPM could be summarized as a replication of private sector practices which focus on quantification, especially in accounting (Olson et al., 1998). One such key innovation is the adoption of accrual accounting from business enterprise. The debates about the adoption of accrual accounting and financial reporting techniques by the public sector have been widespread over the last decade.

In this section, we reviewed the academic debate related to the introduction of accrual accounting in central and local governments at the international level. A systematic analysis of 20 years of accrual accounting research has been conducted. First, this section presents an overview of the reforms implemented in many countries as a consequence of the diffusion of New Public Management paradigm. One of the key elements in this process is the implementation of accrual accounting in government. Accrual accounting involves different issues related to political studies, accounting, organizational, planning, and control. As a consequence, each paper written on the subject of accrual accounting appears to be very complex and difficult to summarize. Scholars have different approaches to the accrual accounting implementation and investigate several topics related to different sectors. The critical lens chosen for retracing these studies is the research approach adopted by authors, ex post or ex ante. This kind of classification may be useful to better define the theoretical contribution of the scholars and the main contribution of this research. This section, at its conclusion, will also discuss gaps in the existing literature, and it outlines the main contribution of this research. Moreover, it will explain the research questions and the direction of the study.

This research is largely informed by studies on the social construction of science, whose most including the eminent scholar in this area, Latour (1979, 2013). Indeed, there are a number of social studies among science and technology topics that focus on the creation of scientific facts and examine how the scientist interacts to produce accepted technologies: the “social construction of technology” (SCOT).

This section contains the research method and the research context of this study. The research method explains how this analysis has been conducted; the research context describes the dissertation setting. This chapter does not list the research methods known in the literature; however, it will explain the methodology and data collection method chosen for this research, and the reasons for this choice included in the literature. In general, it is important to differentiate the methodology from the method. The methodology is the philosophical approach to the research. The method is the way in which the data are collected and analyzed. It is possible to use multiple methods of data collection using only one methodology; however, the method chosen should be closely linked to the research question. If this is the case, the important thing is to triangulate at the end. This is explorative research, an in-depth case study. It has adopted the constructionism research approach and a distinctive method for data collection, non-participant observation in video call conference. Even in the first part of the thesis, in which we do a content analysis of the policy, we maintain the constructivist approach. The research site of this research is Italy, specifically with a focus on the regional government in “Campania”. The Italian case was particularly interesting since Italy, at the time of the data collection, was at a crucial point in the initial stage in its adoption of accrual accounting. Thus, the second part of this thesis describes the research context of this research. Specifically, it summarizes the Italian institutional setting and a brief excursus of reform in public sector accounting. Moreover, it presents specifics related to accrual accounting adoption in the intermediate level of government in the Campania region.

This chapter contains partial research results, specifically, results from the documentary analysis. According to the theoretical framework and the chosen methodological approach, the results of this research are the systematization of the artifacts, which appear during the accrual accounting construction. Accrual accounting is canonically recognized by private sector as systematic practice for reporting the results of the company (Potito, 1973). Throughout these chapters, this research will illustrate that this knowledge is not well established and defined in the public sector. Indeed, accrual accounting is distorted during its translation to the public sector. These results are obtained from primordial applications of the new technology, because the trial is still ongoing. In Italy, this trial is called “Experimentation” (Sperimentazione). Experimentation is defined by Bachelard as “Experts, equipped with instruments to follow the collective experiment in a controlled environment” (Bachelard, 2007). Thus, we will have analyzed the collective action before and after the policy document was composed. The material elements that constitute the foundation of the accrual accounting system in the public sector are laws, tools (ICT), designers, and implementers. Indeed, to understand how this system translates into the public economic and financial system requires us to examine its text features, which reveal its original framework. Accrual accounting gets the highest degree of forma legitimacy from the Decree 118/2011. However, in the decree, the definition of accrual accounting plays a marginal role. As a consequence, the trial attempts to explain and analyze how accrual accounting is put into practice in a public setting, as have recent books, conferences, and seminars (both in academia and in the institutional context) on the topic.

The following section describes the empirical study. In order to analyze the translation phase of the policy concerned (among others measures) the implementation of an accrual accounting system, it has been visited as a non-participant observer of the Campania region. In line with Latour’s theory, the case study analysis investigates scientific practice in the laboratory, the Campania region, which is a region involved in the accrual accounting system trial where the actors are engaged in the frequent manipulations and interpretations of the policy. The analysis is based on materials obtained between June 2012 and December 2013. Even in their “crude state”, these discussion notes provide a useful opportunity for a close analysis of the construction of facts (Latour & Woolgar, 1979). This analysis reviewed short excerpts from video call conversations during ordinary interactions in the laboratory. These excerpts to illustrate some of the ways in which the accrual accounting system arguments are constantly modified, reinforced, or negated, studying accounting its construction in action. Restricted knowledge about the “black box accrual accounting” reveals that it is still a fluid object not yet relatively stable. There are numerous doubts and uncertainties surrounding accrual accounting in the public sector. These are not entirely dissipated as the process is translated into the public sector. There are a large group of administrators who resist the translation of the accrual accounting system into practice for two main reasons. First is uncertainty about the system’s identity and its usefulness. Second is the contemporary presence of other black boxes. The rest of the measures contained in the reform which must be implemented are perceived as priorities.