Changing the Accounting System to Foster Universities’ Financial Sustainability: First Evidence from Italy

Ferdinando Di Carlo, Guido Modugno, Tommaso Agasisti () and Giuseppe Catalano
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Ferdinando Di Carlo: Department of Mathematics, Computer Science and Economics, University of Basilicata, via Nazario Sauro, 85100 Potenza, Italy
Guido Modugno: Department of Economics, Business, Mathematics and Statistics, University of Trieste, Piazzale Europa 1, 34127 Trieste, Italy
Giuseppe Catalano: Department of Computer, Automatic and Management Engineering “Antonio Ruberti”, Sapienza University of Rome, via Ariosto 25, 00185 Rome, Italy

Sustainability, 2019, vol. 11, issue 21, 1-18

Abstract: According to the European University Association, nowadays financial sustainability is one of the key challenges for Higher Education Institutions. The financial sustainability of public universities is threatened by cutbacks in public funding and by society’s growing demand for improvements to the volume and quality of services provided. A recent reform in Italy has determined that universities are required to move to accrual accounting, starting from the assumption that this system responds more effectively to issues relating to financial stability control. This paper evaluates whether the new financial reporting system is better placed to represent the universities’ conditions of financial sustainability. Moreover, specific measures have been developed to investigate which financial strategies, if any, have been adopted in Italian universities to react to the new competitive context. Working in collaboration with practitioners from the HE sector, the research team developed a framework based on specific financial ratios to assess the financial sustainability of these institutions and to analyse their financial strategies. The findings reveal that, notwithstanding some common features, there are significant variations between Italian universities and they are addressing the new challenges with a range of different approaches.

Keywords: financial sustainability; universities; financial statements analysis; accrual accounting; financial reporting system (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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