Law 196 of December 31 2009 introduced a major reform to the public accounting and financial system. The new accounting law aims at harmonising the structure of budgets and the accounting rules applicable to the public sector.
These principles will be enacted by the government through legislative decrees to be approved within one year after new accounting law enters into force. According to one of the rules to be enacted, public entities shall have consolidated budgets with companies owned by them.
According to Article 10 of the New Accounting Law a new document Decision for Public Finance shall be prepared for the public sector and shall contain, amongst the others, the objectives of the Government's economic policy as well as the economic and financial estimates in the public sector over three years.
The Decision will also indicate the provisions of the internal stability pact as well as the sanctions that may be applied to public territorial entities (such as regions and municipalities) in the event of any failure to comply with the provisions of the internal stability pact.
Article 11 of the new accounting law lays down provisions relating to the stability law, which will replace the so-called financial law. The stability law sets forth measures to be implemented for the achievement of the objectives referred to in the Decision during the relevant three-year period.
The stability law will also indicate the maximum number of transactions the public sector can enter into in the financial market, any changes to the rates of taxes levied by the central government, and any other provision necessary to fulfil the internal stability pact.
The bill of the stability law will be brought before the Parliament together with the bill of the budget law.
According to the new accounting law, from 2011 the analysis of the results of the economy in to the preceding year and the variation (if any) from the objectives set forth in the Decision shall be contained in the report on economy and public finance.
Pursuant to Article 48 of the new accounting law any financial transaction entered into by a public entity as debtor must contain a specific clause according to which the financing bank is obliged to give notice of the execution of the financial transaction to the Ministry of Economy and Finance, to ISTAT (the Italian national statistics office) and to the Bank of Italy within 10 days of its execution.
This communication must contain (i) the date and amount of the transaction and (ii) information on the relevant financing plan and amortising plan (for principal and interest), if any.
Should the financing bank fail or delay to send such a communication, a fine equal to 0.5% of the amount of the relevant transaction will be applied to the financing bank.
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