Title: Romania’s Financial Regulatory Authorities: Accounting, Auditing, and Ethics

This article provides an overview of the key regulatory frameworks, auditing oversight, and standard-setting bodies in Romania for accounting, auditing, and financial reporting.

Accounting Framework

Regulations and Standard-Setting

• The Ministry of Public Finances (MFP) governs accounting regulations with the Order 1802/2014 and its amendments.
• The Accounting Law (82/1991) designates the MFP as Romania’s accounting standard-setter.
• All listed companies in Romania must apply International Financial Reporting Standards (IFRS) in their annual financial statements.
• The MFP determines the tiers of Romanian Accounting Standards (RAS) applicable to different entity sizes.

Application of IFRS

• All listed companies in Romania must apply IFRS in their annual financial statements.

Auditing Framework

Statutory Audit Oversight

• The Law No. 162 of 2017 on Statutory Audit of Annual Financial Statements and Annual Consolidated Financial Statements transposes the EU Audit Directive.
• Mandates that audits be conducted in compliance with International Standards on Auditing (ISA).
• The Statutory Audit Public Oversight Authority (ASPAAS) ensures the harmonization of national auditing standards with EU Directives.

Regulation of Accountancy Profession

• The government and professional accountancy organizations regulate accounting and auditing professionals.
  • Body of Expert and Licensed Accountants of Romania (CECCAR).
  • Chamber of Financial Auditors of Romania (CAFR).

Auditor Education and Training

• Aspiring auditors must complete a degree, theoretical training, practical experience, and pass a final professional competence examination.

Audit Oversight Arrangements

Primary Oversight Body

• The ASPAAS is the primary oversight body of the audit activity.

Cooperation with National and International Competent Authorities

• ASPAAS is a member of the Independent Forum of Independent Audit Regulators.

Quality Assurance (QA)

Legislation and Implementation

• The ASPAAS is the authority to conduct QA reviews for all mandatory audits.
• The Chamber of Financial Auditors of Romania (CAFR) now performs QA reviews for non-statutory audits and other types of engagements.

Ethics

Code of Ethics for Professional Accountants

• The ASPAAS and CECCAR adopt ethical requirements for auditors and expert and licensed accountants, respectively.

International Education Standards

Implementation and Commitment

• The Romanian organizations have committed to aligning with International Education Standards.

International Standards on Auditing

Application and Translation

• The ASPAAS has delegated the authority to apply ISA to the Chamber of Financial Auditors of Romania (CAFR).
• The 2020 IAASB Handbook has been adopted, while the 2022 Handbook translation is in progress.

Code of Ethics for Professional Accountants

Adoption and Translation

• The 2021 International Code of Ethics has been translated into Romanian and published.

Public Sector Accounting Standards

Adoption and Future Plans

• Partial accrual national standards are currently applied, and full accrual-basis standards are expected to be adopted by 2025.
• The Ministry of Public Finances (MFP) is responsible for the adoption of public sector accounting standards in Romania.

Investigation and Discipline

Establishing Systems

• Both the ASPAAS and the Chamber of Financial Auditors of Romania (CAFR) have established investigative and disciplinary (I&D) systems for their respective members.

Challenges and Improvements

Areas for Improvement

• Both organizations have identified areas for improvement, including the investigative processes, composition of the Disciplinary Committees, and procedures for making results public and coordinating with outside bodies.