ASSESSING FINANCIAL HEALTH OF LOCAL GOVERNMENTS: GOING BEYOND ACCOUNTING STANDARDS ; ASSESSING FINANCIAL HEALTH OF LOCAL GOVERNMENTS: GOING BEYOND ACCOUNTING STANDARDS : A COMPARATIVE STUDY BETWEEN FRANCE AND ITALY

Abstract

International audience ; Context. The issue of fiscal sustainability has affected not only central governments but also – and in some instances with more severe impacts – local governments (LGs) especially in contexts with high autonomy. This has exacerbated, at both the operational and scientific level, the issue of having effective measurement systems and assessment methodologies to detect, and therefore to prevent, financial defaults. Accounting plays an important role to understand the financial health of local governments. Yet, not only the debate about which system of accounts is more suitable for this purpose is still open, but also the growing development of overlaps and linkages within governments and private-sector organizations to provide local services in the era of the so-called " network governance " (e.g., outsourcing, public-private partnership, and, in some countries, the increasing phenomenon of public owned enterprises) and the intertwining of fiscal rules provided by central governments as well as the differentiated effects of local economies have tangled further. Problem. A greater need for cross countries comparative financial health analysis has emerged for several years, not only to compare central governments, but also LGs, especially in those supra-national settings like the EU. The work on international accounting standards is a great move toward more accurate cross country comparisons. However, the cultural background, the risks and protections offered by each country to LGs may lead to different financial health analysis's objectives and to various methodologies and focuses, that cannot be taken into account by accounting standards only. Objective. The paper offers to identify and discuss practitioners' visions of LGs' financial health and their objectives when assessing LGs' financial health. What do they consider to be a " bad financial situation " ? It aims at understanding the perceived influence of national environment (legislation, accounting reliability, LG perimeter…) on ...