Innovation in Public Sector Accounting: a New Role for Local Governments?

The research aims to analyze how local governments can adopt accounting innovations to reinvent their role. This report attempts to define the importance of reducing information asymmetry among citizens, policy-makers, and public managers, as well as how accounting system reform can support the process. This paper makes use of a case study based on the realization of a medium-sized Italian municipality’s consolidated financial statements, exploiting the action research method. The analysis outlines that, on one hand, the development of new accounting tools can enhance organizational awareness, while on the other hand, there are some possible limits regarding internal and external accountability.