Cash accounting system according to IAS/IFRS

Accounting International standards are mainly oriented towards cash information for enterprise performance evaluation, i.e.: - Ias n.7 requires cash flow statements according to direct method of cash inflows and cash outflows; - Ias n.36 requires cash inflow and outflow for cash generating units; as well as FAS 142 requires cash inflow and outflow for reporting units; - FASB Concepts Statement n.7 “Using cash flow information and present value in accounting measurements”. Two accounting systems exist around the world: the financial accounting system used in almost all countries and the income accounting system used mainly in Italy and in a few other countries. In the Italian language specific terms are used to define the two different accounting systems: the “Anglo-Saxon accounting System” and the “Italian accounting system”. It is important to keep in mind that the Anglo-Saxon accounting system is the evolution of Besta’s accounting system and it can be defined as the accounting system of assets, liabilities and equity; on the contrary the Italian accounting system, belonging to Zappa’s theory, is usually defined as the profit and loss (or income) accounting system. Nowadays enterprise accounting informative systems are not able to offer a complete bookkeeping system in order to comply with Ias 7 and Ias 36 requirements, therefore an adequate information system is required. In fact, both Italian and Anglo-Saxon accounting systems through their integrated accounting recordings cannot represent an adequate support for cash accounting. The aim is to measure income and capital. These are only two of the three main criteria used for enterprise performance evaluation: so there is no evidence of any cash inflow and outflow records in the accounting system. It is important to point out, in order to understand the relevance of a cash accounting system, that cash inflow and cash outflow can be respectively investigated in debit and credit sections of cash equivalent accounts, but there is no evidence of cash flow origin. In this way Ias 7’s requirements cannot be fulfilled, because net cash flow from operating activities must account: • cash receipts from customers • cash paid to suppliers • cash paid to employees • cash paid for other operating expenses • interest paid • income taxes paid Italian business economic literature focused mainly on the integration of management and financial accounting, first of all from a theoretical point of view, secondly from an empirical approach thanks to integrated administration information systems evolution (better known as Enterprise Resource Planning); therefore only few Italian scholars have paid their attention to and investigated an integrated accounting system for cash flow records. Now international accounting standards view cash flow as a measure for business performance (both for entities and business units), but enterprises do not have a cash accounting system integrated with financial and management dimensions. An integrated accounting system is necessary to record cash accounting both for cash flow statements and cash generating units.