Title: Accounting manipulations in public sector: an empirical analysis of European Union countries' accounts

Authors: Sandro Brunelli; Alessandro Giosi; Marco Caiffa; Riccardo Savio

Addresses: Department of Management and Law, University of Rome 'Tor Vergata', Via Columbia, 2, Rome, 00133, Italy ' Department of Human Science, LUMSA University of Rome, Piazza delle Vaschette, 101, Rome, 00193, Italy ' Deloitte & Touche Inc., Via della Camilluccia 589/a, Rome, 00135, Italy ' Department of Law and Economics of Productive Activities, University of Rome 'La Sapienza', Via del Castro Laurenziano, 9, 00161, Rome, Italy

Abstract: This paper detects whether and to what extent accounting manipulations take place during the reconciliation process from government accounts (GA) to national accounts (NA) when preparing the EDP tables required by the European Commission for each country. In the literature, different theories explain the 'why' of accounting manipulations and different models exist to detect 'how' accounting manipulations occur. However, there are scanty investigations aiming to measure the same phenomenon in the public sector. Investigating a period between 2002 and 2020, our findings show that accounting manipulations exist and have a wider diffusion across European countries. We feed the existing literature by highlighting the magnitude of accounting manipulations and to what extent existing differences between the GA and NA would automatically produce biased results. Finally, we design a new path towards selected fine tuning actions of GA and NA standards for the sake of a clearer European Union fiscal policy.

Keywords: accounting manipulation; government accounting; GA; national accounting; NA; accrual accounting; earnings management; European fiscal policy; excessive deficit procedure; EDP.

DOI: 10.1504/IJMFA.2025.142958

International Journal of Managerial and Financial Accounting, 2025 Vol.17 No.1, pp.75 - 102

Received: 23 Dec 2022
Accepted: 31 Aug 2023
Published online: 02 Dec 2024 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article