Internal Accounting Measurements and Information for External Parties: An Analysis of Their Relationship in the Italian Banking Sector

In the management accounting literature, many reasons are cited to explain changes in internal accounting measurements. These include variations of institutional factors, modifications of the organisational or cultural profiles of single firms, reasons which vary from firm to firm and changes in the context in which firms operate. The main objective of this study was to better understand if hanges in accounting requirements from external parties, when invested with considerable managerial content, might play a similar role. The Italian banking sector served as our point of reference. We not only analysed changes observed in the sector and in the accounting regulations for the market and the supervisory authority, but also interviewed representatives of several Italian banks. Our analysis shows that the sector is developing in terms of greater market orientation and that major changes in internal accounting measurements have taken place in the banks we interviewed. The past decade has also witnessed the transformation of external accounting requirements, with more importance being assigned to managerial aspects. However, our observation has revealed that such management-oriented accounting requirements play a secondary role in modifying the internal accounting measurements utilised in Italian banks. This paper was intended to serve as an initial attempt to better understand a sector accountants have traditionally paid little attention to. Banking culture and rhetoric, both in Italy and beyond, is moving toward a wider acceptance and use of formal internal accounting measurements. We believe that more needs to be known about the motivations, peculiarities, effects and national distinctions behind this process.