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Romania Aligns Financial Reporting Framework with International Standards, Says IFAD Study

Convergence with International Standards

A study by the International Federation of Accountants (IFAD) on General Accepted Accounting Principles (GAAP) convergence has found that Romania’s financial reporting framework is converging with international standards. The country’s professional accounting body, Corpul Expertilor Contabili si Contabililor Autorizati din Romania, also notes the progress made in adopting International Financial Reporting Standards (IFRSs).

World Bank’s ROSC Report Commends Efforts

The World Bank’s ROSC (Report on the Observance of Standards and Codes) Accounting and Auditing Report for Romania highlights the country’s efforts to align its financial reporting framework with international standards. The report commends Romania for having a well-established accounting framework, governed by several laws and regulations.

Adoption of IFRSs

Romania adopted IFRSs in 2005, following the European Union’s (EU) requirement for listed companies to prepare their consolidated financial statements according to IFRSs starting from financial year 2005 onwards. The EU’s IAS Regulation allows member states to opt out of certain requirements, and Romania has taken advantage of this option.

Governance Framework

Romania’s accounting framework is governed by several laws and regulations, including:

  • Accounting Law 82/1991 (revised)
  • Order of Ministry of Public Finance 907/27.05.2005 (OMF 907)
  • Order of Ministry of Public Finance 1752/17.11.2005 (OMF 1752)
  • Order of Ministry of Public Finance 2001/22.11.2006 (OMF 2001)
  • Order of Ministry of Public Finance 1121/4.07.2006 (OMF 1121)

EU Directives and IFRSs

The OMF 1752, which applies to all companies except banks and financial institutions, does not make direct reference to IFRSs but rather to EU Directives IV and VII. On the other hand, OMF 907 refers to listed companies, credit institutions, insurance companies, and subsidiaries of groups applying IFRSs without mentioning preparation of financial statements compliant with EU Directives.

European Commission’s Document

The European Commission periodically publishes a document summarizing the use of options under the IAS Regulation by EU member states. For information on each country’s plans, readers can access the table on use of IFRS options in 28 EU member states.

Notes to Accounts and Audit Reports

In notes to the accounts and audit reports, companies subject to EU Regulation 1606/2002/EC (the ‘IAS regulation’) must state that they prepared their financial statements “in accordance with International Financial Reporting Standards as adopted by the EU” or “in accordance with IFRSs as adopted by the EU”. Companies may also include a footnote stating compliance with IFRSs as adopted by the International Accounting Standards Board (IASB) if applicable.