Italy: Its time for a European framework on accountability

Travaglini began researching the non profit world in 1991 when Italy approved the framework law on voluntary organisations. Since then he has become an expert in accountability practices and has recently published a comparative paper on non profit financial reporting in the UK, Spain and Italy. Here are his conclusions.

What main differences emerged from your research on accountability systems in the UK, Spain and Italy?
The United Kingdom has a centuries-long history in non profit regulation. However it was only with the ‘Charities statement of accounts regulations’ in the sixties that charities have been required to keep to defined accountability standards. Today, economic and financial reporting is ruled by the Charity Commission and is governed by the Charities’ Statement of Recommend Practice (SORP), which provides a clear and transparent representation of activities and financial standards for those organisations with an income that exceeds a hundred thousand pounds. In Spain, on the other hand, rules of accountability for non profits were promulgated with a law called the ‘Royal Decree 776/98’. This model derives from the General Countable Plan used for commercial entities. In Italy the scenario is again different and the idea of a separate annual report for non profit organisations is taking its first steps. Just this year the Italian Agency for non profit organisations has approved a draft law that gives non profit organisations guidelines for preparing balance sheets.

Do you think that these approachces also reflect cultural differences between these national third sectors?
Yes, certainly these differences depend on different cultural and historical evolution. Italy generally characterized by a lack of accountability, which is why the process for non profits has been neglected for so long. On the other hand, Spain, which is strong after its recent economic development, has decided to adopt international accountability standards for its associations and foundations. The UK strides on ahead following its own criteria. But I think that now it is necessary to build a European culture of accountability for non profit organisations. This will simplify sharing experiences and also give the possibility of building a common accountability vision.

The role of the non profit sector in the European community is getting more important. What challenges does the non profit sector face if it wants to achieve a common accountability model?
The major challenge for non profit organisations at the moment seems to be the right to work outside their country of origin and to operate at a European-level. Of course this matter focuses the attention on the process of harmonizing accounting requirements for the third sector and until now both the European Commission and Parliament have largely avoided issuing specific rules for financial reporting for non profit organisations.

Do you think that the enlargement of the European community could brake the process of harmonizing accounting requirements for the third sector?
I don’t think so. There will be only more countries to consider. Undoubtedly it’s a challenging task for scholars and EU regulators to foster accountability in the European third sector.

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