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Domestic Practice, Comparative International Analyses and Accounting Discretion—Italian Savings Banks’ Pension Cost Accounting

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  • Francesco Capalbo

Abstract

In countries where the use of financial statements is minimal and relative accounting debate less intense, domestic practices may gain benefit from being consistently applied. Comparison with foreign experience is crucial. It leads to questioning of the appropriateness of practices that might otherwise never be discussed, particularly where they are developed in such a way as to favour the stakeholders controlling the accounting process. A salient example evidencing the above claims is to be found in the Italian savings banks (hereafter ‘banks’) accounting for the cost of defined benefits pension plans. The Italian financial system is credit‐based. While banks play a predominant role, the financial industry itself enjoys significant autonomy in setting its accounting standards. This is especially so in respect of the accounting for the cost of pensions as savings banks have offered the most significant and almost unique example of employees’ defined benefit pension plans in Italy. The present article compares some aspects of the long debated international and Anglo‐Saxon standards’ recommendations with the infrequently questioned Italian domestic practice. The substantial deviations that emerge in the Italian system favour particularly management and proprietorship by allowing a significant degree of discretion regarding the labour cost figure, thereby enhancing the banks’ salary bargaining strength.

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  • Francesco Capalbo, 2003. "Domestic Practice, Comparative International Analyses and Accounting Discretion—Italian Savings Banks’ Pension Cost Accounting," Abacus, Accounting Foundation, University of Sydney, vol. 39(1), pages 66-81, February.
  • Handle: RePEc:bla:abacus:v:39:y:2003:i:1:p:66-81
    DOI: 10.1111/1467-6281.00120
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    Cited by:

    1. Enrica Sepe & Margherita Smarra & Marco Sorrentino, 2015. "Does Ethic Rating Decrease Firms’ Cost of Capital? Empirical Insights from the Italian Setting," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(4), pages 54-68, October.
    2. Gerry Gallery & Natalie Gallery, 2004. "Applying Conceptual Framework Principles to Superannuation1 Fund Accounting," Abacus, Accounting Foundation, University of Sydney, vol. 40(1), pages 117-131, February.

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