WASHINGTON - The National Association of Counties, responding to the huge losses reported by Orange County, Calif., announced a new program yesterday to assist and advise counties in matters relating to public finance and pooled investments.

At the same time the association warned that Orange County's bankruptcy is an isolated case and that more review should be done before state and federal regulators and lawmakers make any changes.

"This is not a time to hastily enact legislatively or regulatory change," said Randall Franke, the association's president and a commissioner from Marion County, Ore. "This is a time for fact finding and analysis."

Franke said the events leading to Orange County's loss were complex and that regulators and lawmakers should fully understand the situation prior to any regulatory response.

"At this time, we still believe the situation in Orange County, California is an isolated case," Franke said.

To help counties, the association said it established the fenancial services center, which is a joint venture partnership with Davenport Pitts Group. The financial services center was formally established last summer but is still in its start-up phases.

In light of the recent losses, the new center will serve an important task, Franke said. "The financial crisis in Orange County ... has brought the issue to a new awareness for both public officials and our constituents," Franke said.

"Because of the complexity of the issues and the broad and varied range of investment opportunities, officials and the public itself, are often confused about the ranges of appropriate and secure investments," Franke said.

The financial services center will research and develop a variety of products throughout 1995, including products already successfully provided by state associations of counties or affiliates.

New product offerings will be bid and offered to counties during the calendar year.

"The intent of the financial services center is to work with county governments to find creative solutions to their financial problems by developing new, less expensive, and better-quality financial products and services," said Doug Bovin, the association's first vice president and commissioner of Delta County, Mich.

Bovin maintained that such a centralized venture can provide better financial services and products than counties could develop elsewhere.

"Because of NACo's stature as the organization that represents counties nationwide, we can pool this tremendous purchasing power," Bovin said.

"After the new year and by the end of the first quarter of 1995 we plan to have at least one, if not more, financial services and products on the market."

Bovin characterized the new service as the creation of a massive cooperative purchasing alliance that can negotiate new or enhanced financial products and services for counties.

The newly established financial services center will seek ongoing relationships with major sector firms, which will be responsible for providing information and advice.

However, these partners wouldn't have exclusive rights to offer products, but presumably would be obligated to bid their products against those of other competitors.

In addition to the financial services center, the county association said it has formed a task force on the investment of public funds to analyze the current condition of county investments.

The task force will analyze the extent to which current investment practices and procedures may either bolster or impair the ultimate security of public funds.

Franke said the task force will report next March on the best county investment practices and will recommend products and services the financial services center should create.

Additionally, the association will enlist professional financial advisers to deliver educational seminars and produce written materials to help county officials avoid investment problems and it will establish a financial hot line.

In a separate development, the American Institute of Certified Public Accountants yesterday released a reference guide to help in the accounting and auditing of derivative financial instruments.

"We're giving financial statement preparers, auditors, and users a much-needed road map for navigating current derivatives accounting and auditing literature," said James Johnson, chairman of the public accountants association.

Johnson said the report includes background information about basic contracts, risks, and other general matters on derivatives. The accountant group's report focuses on forwards, futures, swaps, options, and similar derivatives generally not recognized in balance sheets.

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