This presentation was made by at the 19th OECD Senior Financial Management and Reporting Officials Symposium held at the OECD Conference Centre, Paris, on 4-5 March 2019

1. Chart of Accounts
A multidimensional Chart of Accounts for the accrual
reform in Italy
19th Annual Meeting of
OECD Senior Financial Management and Reporting Officials
Paris, 4-5 March 2019
Servizio Studi Dipartimentale - Research Division

2. Research Division
The «Integrated» Chart of Accounts (ICoA)
Paris, 4-5 March 2019
The Chart of Accounts
2
• The public accounting and finance reform law of 2009 introduced
accrual accounting but only for informative purpose. In this framework the
current CoA was developed for implementing a so called "integrated
accounting".
• The Chart of Accounts was
intended for supporting
integrated bookkeeping
between the traditional
budgetary accounting (based
on cash/commitment), the
financial accounting (accrual
based) and for generating
statistical data (ESA2010)......
…..just “pushing one single
button”

3. Research Division
ICoA: the structure
Paris, 4-5 March 2019
The Chart of Accounts
3
The ICoA is composed by three modules
1st module
2nd module
3rd module
It is meant to classify the accounting records made under the
commitment/cash accounting system.
The items are linked with the financial statements built under the commitment/cash method.
It is meant to classify revenues and expenses records made under the
accrual accounting.
The items are linked with the Income statement built under the accrual principle
It is meant to classify asset and liabilities records made under the
accrual accounting.
The items are linked with the balance sheet built under the accrual principle.
The items of the 1st modules are connected
with the ones of the other modules through a
“Transition matrix”.
The “transition matrix” is a technical tool
built to support the operational accounting
entries with the dual “integrated” accounting
system.
… just “pushing
one single button”

4. Research Division
ICoA: how it works
Paris, 4-5 March 2019
The Chart of Accounts
1st module
Commitment/Cash
Budgetary accounting
2nd module
Accrual
Financial accounting
3rd module
Accrual
Financial accounting

5. Research Division
Paris, 4-5 March 2019
The Chart of Account
5
The matrix generates distortions with respect to the accrual principle. In fact, the
matrix forces to recognize expense (as cost) and revenue (as income) not according to the
accrual principle* but according to the relevant commitment/cash phases (administrative
acts) of revenue and expenditure for the purposes of budgetary accounting.
*According to the Conceptual framework consultation paper (2011) issued by the International Public sector Public
Standard Accounting Board (IPSASB) “accrual accounting recognizes transactions and events when they occur, rather
than when the transactions and events are realized (cash) or settled (commitment, meant as legal obligation)”.
Examples of the proper usage of the accrual principle are:
• Record revenue when you invoice the customer, rather than when the customer pays you.
• Record an expense when you incur it, rather than when you pay for it.
• Record the estimated amount of bad debt when you invoice a customer, rather than when it becomes apparent that the customer will not pay
you.
• Record depreciation for a fixed asset over its useful life, rather than charging it to expense in the period purchased.
• Record a commission in the period when the salesperson earns it, rather than the period in which he or she is paid it.
• Record wages in the period earned, rather than in the period paid.
ICoA: the matrix is the main inconsistency

6. Research Division
Paris, 4-5 March 2019
The Chart of Account
6
 Lack of Unified framework
 Redundancies
 Lack of Internal consistency
 Degree of granularity not always adequate
 Use of a statistical vocabulary
According to the gap analysis, the Italian ICoA shows
critical issues in terms of:
Other inconsistencies of ICoA

7. Research Division
Paris, 4-5 March 2019
The Chart of Accounts
7
Gap analysis
• Study of EUROSTAT requirements
• Analysis of other countries’ CoA (i.e. Portugal,
Belgium, France, Estonia…), also with the
support of questionnaires.
PARTNERACTIVITIES TIMING
Structure of the Multidimensional Chart of
Accounts
Definition of the structure and the underlying
accounting rules (compliant to an accrual
IPSAS/EPSAS based accounting)
1
2
3 Correlation tables
Construction of the correlation table with ESA
2010, budgetary classification, ….
March 2019
September 2019
October 2019
Call: Economic governance (ID: ESTAT-PA2O-2018) Topic: “Modernisation of public sector
accounting on an accruals basis in support of EPSAS”
Design a chart of accounts for the
EPSAS/IPSAS based accrual accounting

8. Research Division
International experiences - Lesson learned from…
Paris, 4-5 March 2019
The Chart of Accounts
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PORTUGAL – Multidimensional Chart of Accounts

9. Research Division
International experiences - Lesson learned from…
Paris, 4-5 March 2019
The Chart of Accounts
9
BELGIUM – Multidimensional Chart of Accounts

10. Research Division
ICoA
Work in progress for a Multidimensional CoA (MCoA)
Paris, 4-5 March 2019
The Chart of Account
10
Commitment/cash
recognition criteria
(Budgetary accounting)
Statistic
nomenclature
(ESA 2010)
NO

11. Research Division
ICoA
Work in progress for a Multidimensional CoA (MCoA)
Paris, 4-5 March 2019
The Chart of Account
11
MCoA
Financial
accounting
(accrual based)
1. Assets
2. Liabilities
3. Net equity
4. Revenues
5. Expenses
Budgetary
accounting
(commitment/cash)
classification
(Program)
COFOG
classification
Other
classifications
Intra Group
transaction
CoA Dimension 1 Dimension 2 Dimension 3 Dimension N Consolidation mark
No Intra Group
transaction
ESA2010
classification
Public order
and safety
3.
Vehicles
1.2.4.
Police
7.
……
XXXX
Transport
equipment
AN.1131

12. Research Division
Objectives
The Chart of Accounts
12
Paris, 4-5 March 2019
Simplification
• More flexibility: CoA compulsory only at 3rd level (required for consolidating);
• CoA is one single list of accounts (without modules and “transition matrix”);
• Use of an appropriate accounting vocabulary (no statistical);
• “Tag” intragroup transactions to enable a process of highly automated
consolidation of accounts (Portugal experience);
Additional information
• Multidimensional CoA: Links with other classifications (without “transition
matrix”) provides additional information for different purposes (budgetary
accounts, management accounts, statistical accounts).
Further objectives
• Harmonization among public sector entities
• Independent accounting systems (the one must not prevail on the other)
• In line with the requirements of an accrual IPSAS/EPSAS accounting system.

13. Research Division
13
Contacts
Fabrizio Mocavini – fabrizio.mocavini@mef.gov.it
Rocco Aprile – rocco.aprile@mef.gov.it
Pierpaolo Italia - pierpaolo.italia@mef.gov.it
Ministry of Economy and Finance
Via XX Settembre, 97
Rome - Italy
Paris, 4-5 March 2019