Accounting for the ‘causes’ of the revenues and expenditures of the State: the first budget law of the Kingdom of Italy

This article examines the accounting logic of the first State budget law of the Kingdom of Italy, approved in November 1861 shortly after the country’s unification. The analysis reveals that the legal provisions dedicated to accounting themes, while limited in number, contain elements of great significance. Namely, these provisions indicate that the budget was nominally based on a cash logic, yet contained early traces of an accrual logic. Particularly significant are the provisions that defined revenues and expenses as the causes of financial inflows and outflows, and those that distinguished these flows based on the degree of recurrence – permanent or transitory – of their underlying cause. Drawing on Pellegrino Capaldo’s theory on the appropriate accrual principle applicable to the State budget, the analysis suggests that the 1861 budget law of the Kingdom of Italy foresaw a possible route that accrual budgeting and accounting could take in central government – one that was not taken, but which may be interesting to reconsider.