Court says 'anomalies' in local govt derivatives use

(ANSA) - Rome, May 6 - Italian local governments created some "serious anomalies" on their books through the use of such complex financial instruments as derivatives contracts, the Audit Court said Wednesday. Postings in account books were often "incorrect" while fiscal regulations were violated and "considerable contractual imbalances" created, the court said in a report for the Lower House finance committee.
    Governments also failed to properly assess the cost-effectiveness of derivatives contracts worth about 25 billion euros, the court said.
    It said that at the beginning of the year, overall government derivative contracts were worth a total of about 160 billion euros.
    It also cautioned the committee against assuming that financial market losses for derivatives contracts does not mean these were made in error or a result of poor management.
    Committee member should "avoid simplifications which often incurs when discussing these topics," the court said.