Institutional portal - Municipality of Milan

Verification

It is the legal-accounting operation with which the administration ascertains the reason for the credit, the debtor, the relative amount and the deadline. It constitutes the first phase of the revenue acquisition procedure.
Since 2015, with the entry into force of accounting harmonization for all municipalities, the assessment is recorded in the financial year in which the credit expires.

Financial autonomy

It represents the organisation's ability to finance itself with its own means, expressed as a percentage.

Tax autonomy

It represents the entity's ability to finance itself through its taxing power, expressed in percentage terms.

Budget (or Forecast Budget)

It is the financial document in which the resources and expenses relating to the reference three-year period are foreseen. The appropriations for the three-year period are authorizing.

Consolidated financial statements

It is a document that serves to truthfully and correctly represent the financial and equity situation and the economic result of the overall activity carried out by the entity through its organizational structures, its instrumental entities and its controlled and investee companies.

Checkout

It is the set of sums actually collected or paid during the financial year, regardless of whether they were ascertained or committed in previous financial years.

Expertise

The revenue that the organization has the right to collect and the expenses that it is committed to disbursing during the financial year, regardless of whether they will actually be collected or paid in it.

Enhanced financial literacy

It is the principle introduced by the public accounting reform (Legislative Decree 118/2011) according to which active and passive obligations are recorded when the obligation arises with attribution to the accounting records of the years in which the obligation is due.

Derivatives

In the meaning used in these notes, it identifies atypical contractual forms linked to financial debt operations. In particular, they are contracts which, against an underlying debt, allow the coverage of risks against fluctuations in interest rates. The Municipality of Milan closed some of these contracts at the beginning of 2012, with positive effects on the budget.

DUP=Single Programming Document

It is the document that allows the strategic and operational guidance of local authorities and allows them to deal with environmental and organizational discontinuities in a permanent, systemic and unitary way. The DUP constitutes, in compliance with the principle of coordination and coherence of budget documents, the necessary prerequisite for all other programming documents. It consists of a strategic section, which identifies the medium-long term strategic objectives and an operational section which contains the organisation's operational planning with a time horizon equal to that of the budget forecast (three years).

revenue

These are the financial resources that the Municipality can have at its disposal.

The entries are divided into Titles/Types/Categories/Chapters:

Title 1 – Current revenue of a tax, contributory and equalization nature
Title 2 – Current transfers
Title 3 – Non-tax revenue
Title 4 – Capital revenue
Title 5 – Revenue from reduction of financial assets
Title 6 – Taking out loans
Title 7 – Advances from the Institute Treasurer/Cashier
Title 9 – Revenue on behalf of third parties and round games

Current revenue 

These are the revenues, relating to the first three Titles of the Revenue forecasts, aimed at financing current expenses and, if they exceed them, form a budget surplus to be allocated to investments. They are made up of current revenue of a tax, contributory and equalization nature (IMU, additional IRPEF, etc.), current transfers and non-tax revenue (tariffs, proceeds deriving from the management of the organisation's assets, fines and contraventions).

Current revenue of a tax, contributory and equalization nature

They consist of revenues collected from individuals and businesses by virtue of the power of direct or derivative taxation.

Capital account receipts

Revenues of an extraordinary and partly non-repetitive nature, deriving from the disposal of assets and capital transfers, exclusively finance investment expenses, except for exceptions provided for by law (for example part of the proceeds from building permits).

Revenue for third parties and round games

These are the income received on behalf of third parties, followed by expenditure of the same amount for the payment to those who are entitled to the amount collected (a typical example is represented by the withholdings made on the salaries of employees which are then paid to the State).

Current account balance 

Current income must be equal to or greater than current expenses and the expense for the principal portion of the mortgage payments due during the year.

Financial Year

It is the complex of budget management operations, i.e. the execution of revenue and expenditure forecasts, carried out in the financial year.

Restricted Multi-Year Fund

It is a Fund made up of ascertained resources intended for the financing of legally completed debt obligations (commitments) due in financial years subsequent to the one in which the income is ascertained.

Reserve fund

It is a fund to be used for urgent, unavoidable and unexpected expenses. It is mandatorily constituted for an amount between 0,30% and 2% of the total amount of current expenses initially foreseen in the budget. The use of this fund can be ordered by the City Council with its own resolution, to be communicated to the City Council.

Fund for doubtful debts

It is a fund registered in the "expenses" part of the budget forecast against the risk of revenue of uncertain or doubtful collectability.

Commitment

It is the sum owed by the entity following legally completed pecuniary obligations. It is assumed on the relevant allocation of each expenditure chapter. It constitutes the first phase of the expense disbursement process.

Incidence of relevant active residues

It represents the percentage of credits generated during the year

Incidence of accrued passive residuals

It represents the percentage of debt that is generated in the year

Incidence of indebtedness

It represents the incidence of overall debt expenditure (principal + interest) compared to current revenue

Incidence of current expenditure

It represents the percentage impact of current expenditure on total current revenue

Incidence of personnel expenditure

Represents the percentage of expenditure on employee personnel on total current revenue

Local indebtedness per capita

It represents the ratio between debt stock and population.

Passive interests

These are the expenses borne by the organization deriving from the assumption of mortgages and loans or other interest expenses.

investments

Expenditure intended for long-term activities (extraordinary maintenance, new works, infrastructures, etc.). It is financed with capital receipts or debt.

Infrastructure costs

They represent that revenue item that derives from building permits and from the contributions that citizens or businesses pay when activating building interventions.

Capital gains

In the case of the sale of assets, it is the (positive) difference between the sale price and the book value.

Tax pressure

It represents the average per capita level of tax pressure (duties, taxes and duties).

Programming

It is the process by which the objectives are defined and the related financial resources are assigned once a year. The following documents are associated with the programming: DUP, Budget and PEG.

Employees/population ratio

Represents the number of employees for each citizen

Rating

Summary judgment on the solvency of an institution. It is issued by specialized companies. The rating of a Municipality cannot be higher than that attributed to the Italian Republic.

Financial Statement (or Final Balance Sheet)

It is the financial statement that includes the results of budget management, for revenues (established, collected and residual assets) and for expenses (committed, paid and residual liabilities).

Active residues

Revenues ascertained but not collected: constitute a credit to the public body. 

Passive residues

Expenses committed but not yet paid: constitute a debt of the public body.

Reassessment of residues

It takes the form of a phase of analysis of the existing active and passive residues, in order to verify the existence of the relevant legal title. If the latter is missing, the residues are eliminated.

Structural rigidity (or current expenditure rigidity)

It measures the organisation's degree of rigidity in spending decisions, i.e. the percentage impact of personnel expenses and loan repayments on current revenue (so-called mandatory and therefore incompressible expenditure).

Repayment of loans

It is the amount of medium and long-term debt amortization operations, net of interest.

collection
It is the procedure for acquiring and realizing verified credits. It is the second phase of the revenue acquisition procedure.

expenses

Expenses are the resources actually used.

They are divided into Missions/Programmes/Titles/Macroaggregates/Chapters:

Title 1 – Current expenses
Title 2 – Capital expenditure
Title 3 – Expenses for increasing financial assets
Title 4 – Loan repayment
Title 5 – Closing of advances received from the Treasurer/Cashier Institute
Title 7 – Expenses for third parties and transfer items

Current expenses

They constitute the 1st title of the expenditure budget. These are the expenses intended for the production and ordinary operation of the various services provided by the public body, as well as for the redistribution of income for purposes that are not directly productive.

Capital expenditure

They constitute the 2nd title of the expenditure budget and identify all expenses that directly or indirectly impact the formation of the public body's capital (they include expenses for extraordinary maintenance work, renovation, construction or purchase of properties and for the purchase of assets durable furniture or equipment)

Speed ​​of management of current expenses

It represents how many commitments are paid in the year in percentage terms

Speed ​​of collection of own revenue

It represents how many assessments are collected during the year in percentage terms