Romania

As a member of the European Union (EU), Romania is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations.

Accounting Framework

The Order of the Ministry of Public Finances no.1802/2014 sets out the accounting regulations for the preparation of separate annual financial statements and consolidated financial statements with its subsequent amendments and supplements. Law 82/1991 with its subsequent amendments and supplements also known as the Accounting Law, establishes the Ministry of Public Finances (MFP) as the accounting standard-setter in Romania, responsible for transposing EU regulations that require the application of IFRS as endorsed by the European Commission into national law.

In addition to the mandatory requirements to apply IFRS in consolidated accounts, under MFP Order No. 881/2012 all listed companies are required to apply IFRS as endorsed by the EU in their annual financial statements. The MFP has also permitted companies that do not trade in the regulated market to choose between EU-endorsed IFRS for consolidated financial statements or Romanian Accounting Standards (RAS) as established by the MFP.

There are three tiers of RAS applicable for Romanian entities depending on their size. Companies that exceed at least two of the following thresholds must apply the more comprehensive set of RAS: (i) total assets are greater than 4,000,000 EUR; (ii) net turnover is more than 8,000,000 EUR; and (iii) the number of employees is more than 50. Companies that do not exceed the thresholds must apply the simpler set of standards. In addition, micro entities have further exemptions. IFRS for SMEs has not been adopted in Romania.

The MFP is also responsible for approving the accounting standards set by the regulators of banks, insurance, and pension companies. Banks are supervised by the National Bank of Romania. Insurance and pension companies are supervised by the Financial Supervisory Authority (ASF) Each regulator requires entities under its supervision to apply EU-endorsed IFRS.

Auditing Framework

The Law No. 162 of 2017 on Statutory Audit of Annual Financial Statements and Annual Consolidated Financial Statements which transposes the EU Audit Directive, specifies that audits must be carried out in compliance with ISA. ISA are to be applied for audits of entities preparing financial statements using EU-endorsed IFRS and medium-sized companies using the comprehensive set of RAS. Small companies that do not meet two of the three thresholds are not required to prepare audited financial statements. Only members of the Chamber of Financial Auditors of Romania (CAFR) are authorized to perform statutory audits, provided they also have the annual visa granted by ASPAAS.

The Law No. 162 of 2017 also establishes the Statutory Audit Public Oversight Authority (ASPAAS) as the designated organization for ensuring the harmonization of national auditing standards with EU Directives.

In Romania, both accountants and statutory auditors are regulated by the government and professional accountancy organizations (PAOs)—the Body of Expert and Licensed Accountants of Romania (CECCAR) and the Chamber of Financial Auditors of Romania (CAFR). Activities of CAFR are subject to the supervision of the Statutory Audit Public Oversight Authority (ASPAAS), which was established by Law 162 of 2017 as the oversight body of the audit activity.

Law 162 of 2017, in addition to establishing the ASPAAS as the oversight board of the statutory audit activity, outlines activities, rights and duties of auditors and audit firms; establishes the IPD and CPD requirements for auditors; defines entry requirements to the auditing profession; establishes the professional standards; introduces the requirement for implementation of QA review mechanisms; and sets disciplinary arrangements that should be established. Aspiring auditors must have a university degree, completed a course on theoretical training organized or approved by the ASPAAS, three years of practical experience in auditing under the supervision of a qualified auditor/audit firm- acknowledged by ASPAAS as certified mentors, and pass a final professional competence examination organized or approved by the ASPAAS prior to earning the auditor designation and joining the CAFR.

Under the legislation, the ASPAAS’s main tasks are to (i) authorize the registration of statutory auditors and audit firms; (ii) adopt professional standards and ethical requirements, (iii) continuous professional development and training of auditors; (iv) conduct the quality assurance (QA) reviews and investigative and disciplinary (I&D) mechanisms for statutory auditors and firms; (v) organize the professional competence examination for the auditor qualification; (vi) supervise CAFR in carrying out its delegation of tasks; (vii) issue its own regulations as necessary; and (viii) cooperate with other competent authorities nationally and internationally as related to the field of audit. The ASPAAS may delegate any of the above tasks to the CAFR.

CAFR is authorized by Ordinance No. 75 of 1999 to carry out certain responsibilities: (i) maintain registries of its members - auditors and audit firms; (ii) continuous professional development for its members in all relevant fields, except for statutory audit; (iii) investigative and disciplinary activities, related to its members; and (iv) conduct QA reviews for engagements other than statutory audit. CAFR has been delegated the following tasks by ASPAAS: (i) organization of the exam to access practical training; (ii) organization of the professional competence exam at the end of the practical training; (iii) organization of the CPD program for Romanian financial auditors; and (iv) translation and publication of the ISA and International Code of Ethics.

Other professional accountants are subject to the requirements of CECCAR, established by Ordinance No. 65 of 1994 and the Law No 162/2017 on the Statutory Audit of Annual Financial Statements and Annual Consolidated Financial Statements.

CECCAR is empowered to (i) maintain registries of its members; (ii) set IPD and CPD requirements; and (iii) establish ethical standards and an I&D system for its members.

The institute is comprised of expert accountants and licensed accountants and membership of the institute is mandatory for public practice. Expert accountants must have a university economics degree acknowledged by the Ministry of Education and Research, pass an admission/initial exam for IPD, three years of practical experience, and pass an aptitude/final exam. Licensed accountants are to have a high school diploma recognized by the Ministry of Education, Research, Youth, and Sports, pass an admission/initial exam for IPD, three years of practical experience, and pass an aptitude/final exam.

The Statutory Audit Public Oversight Authority (ASPAAS) was established by Law 162 of 2017 as the oversight body of the audit activity.

Under the legislation, the ASPAAS’ main tasks are to (i) authorize the registration of statutory auditors and audit firms; (ii) adopt professional standards and ethical requirements, (iii) continuous professional development and training of auditors; (iv) conduct the quality assurance (QA) reviews and investigative and disciplinary (I&D) mechanisms; (v) organize the professional competence examination for the auditor qualification; (vi) supervise CAFR in carrying out its delegation of tasks; (vii) issue its own regulations as necessary; and (viii) cooperate with other competent authorities nationally and internationally as related to the field of audit.

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

The Body of Expert and Licensed Accountants of Romania (CECCAR)

CECCAR was established on September 21, 1921, and subsequently reestablished by Government Ordinance No. 65 of 1994. CECCAR is comprised of expert accountants and licensed accountants, who must join CECCAR to offer related services. It is mandated by law to (i) maintain registries of its members; (ii) set initial and continuing professional development (IPD and CPD) requirements; and (iii) establish ethical standards and an investigative and disciplinary (I&D) system for its members.

The Chamber of Financial Auditors of Romania (CAFR)

The CAFR was established by Government Ordinance No. 75 of 1999 and is comprised only of auditors – physical and legal persons. CAFR members are authorized to perform other services than statutory audit unless they are issued a license by the ASPAAS (the audit oversight body).

CAFR is authorized by Ordinance No. 75 of 1999 to carry out certain responsibilities: (i) maintain registries of its members - auditors and audit firms; (ii) continuous professional development for its members in all relevant fields, except for statutory audit; (iii) investigative and disciplinary activities, related to its members; and (iv) conduct QA reviews for engagements other than statutory audit. CAFR has been delegated the following tasks by ASPAAS: (i) organization of the exam to access practical training; (ii) organization of the professional competence exam at the end of the practical training; (iii) organization of the CPD program for Romanian financial auditors; and (iv) translation and publication of the ISA and International Code of Ethics.

Both CAFR and CECCAR are Members of IFAC as well as Accountancy Europe. CAFR is also a member of EFAA and the Common Content Project.

Government Emergency Ordinance No. 75 of 1999 and Law No. 162 of 2017 establish of the Statutory Audit Public Oversight Authority (ASPAAS) with the authority to conduct quality assurance (QA) reviews for all mandatory audits.

ASPAAS performs the QA reviews for both public interest entities (PIEs) and non-PIEs. Reviews must be conducted every six years for non-PIEs and every three years for PIEs.

As of 2018, the Chamber of Financial Auditors (CAFR) is performing QA reviews for non-statutory audits and other types of engagements, such as internal audit or other assurance engagements.

CAFR reports that the QA system is in line with SMO 1 requirements.

Current Status: Adopted

In Romania, the initial professional development (IPD) and continuing professional development (CPD) requirements for auditors are set in Government Emergency Ordinance (GEO) No. 90 of 2008 as amended by Law No. 162 of 2017 and implemented by the Statutory Audit Public Oversight Authority (ASPAAS) and the Chamber of Financial Auditors of Romania (CAFR). The requirements for expert and licensed accountants are set by the Body of Expert and Licensed Accountants of Romania (CECCAR) Ordinance No. 65 of 1994.

As of 2020, ASPAAS has delegated authority to CAFR to organize the initial and final competency examinations and the CPD for auditors, which it states align with IES 6 - 8. CAFR indicates that the examinations include a theoretical and practical component to assess competencies. It also has an annual CPD program.

As per CAFR regulation, CAFR active and non-active members must complete 40 hours per year (20 hours of mandatory CPD and 20 hours of optional CPD). ASPAAS regulation requires that active financial auditors complete at least 10 hours of mandatory CPD per year or at least 5 hours for non-active auditors, following that in a 3-year period:

• active auditors attend a total of 60 hours of mandatory CPD and
• non-active auditors attend a total of 30 hours of mandatory CPD.

The CAFR outlines in its SMO Action Plan how key provisions of IES 1 – 8 are addressed by the ASPAAS and/or CAFR for auditors and that educational requirements incorporate the latest revisions to the IEs. The institute also reports that the IES requirements are reviewed and addressed on an ongoing basis by CAFR’s Department for Admission, Continuous Education and Trainees. Further, CAFR indicates that it is a member of the Common Content Project – undergoing a review and assessment that states that its educational programming meets international benchmarks.

CECCAR has stated its commitment to converge with the IESs and it has incorporated the main provisions of IES in the CECCAR internal standards and regulations. CECCAR had reviewed its

Current Status: Adopted

The Law No. 162 of 2017 on Statutory Audit of Annual Financial Statements and Annual Consolidated Financial Statements which translates the EU Audit Directive, stipulates that all statutory audits are to be carried out in compliance with ISA as issued by the IAASB as translated by the Statutory Audit Public Oversight Authority (ASPAAS). In 2021, the ASPAAS delegated this authority to the Chamber of Financial Auditors of Romania (CAFR).

In January 2023, CAFR reports that the 2020 IAASB Handbook, translated to Romanian was adopted by the ASPAAS along with quality management standards effective in the 2021 Handbook.

Current Status: Adopted

Under the Law No. 162 of 2017 on Statutory Audit of Annual Financial Statements and Annual Consolidated Financial Statements, the Statutory Audit Public Oversight Authority (ASPAAS) and the Body of Expert and Licensed Accountants of Romania (CECCAR) are responsible for adopting ethical requirements for auditors and expert and licensed accountants, respectively. In 2021, the ASPAAS delegated the authority to translate the Code of Ethics to the Chamber of Financial Auditors of Romania (CAFR).

As of October 2022, the CAFR has translated the 2021 International Code of Ethics which was subsequently approved and published by the ASPAAS for application. CAFR plans to translate the 2022 Handbook in Q3 2023.

CECCAR also reports that it has adopted the 2021 International Code of Ethics for its members as well.

Current Status: Partially Adopted

The Ministry of Public Finances (MFP) is responsible for the adoption of public sector accounting standards in Romania. MFP Order No. 1917/2005, with its subsequent amendments and supplements, requires the application of accrual-basis accounting principles. Notably, the regulation includes the adoption of certain accrual-basis IPSAS provisions of certain items such as tangible fixed assets, stocks, provisions, expenses, and revenues.

According to the CIPFA/IFAC 2020 International Public Sector Financial Accountability Index, partial accrual national standards are applied currently and full accrual-basis standards are expected to be applied by 2025.

The Chamber of Financial Auditors of Romania reports that it expects the implementation process of IPSAS to be gradual and follow the requirements of the Statistical Office of the European Communities.

Current Status: Not Adopted

The Statutory Audit Public Oversight Authority (ASPAAS) in accordance with Law No. 162 of 2017 and the Government Emergency Ordinance (GEO) No. 23 of 2012 is responsible for establishing an investigative and disciplinary (I&D) system I&D system for statutory auditors and audit firms. ASPAAS is also responsible for the oversight of the I&D system of the Chamber of Financial Auditors of Romania (CAFR).

In accordance with the GEO No. 75 of 1999 and GEO No. 90 of 2008, CAFR is responsible for adopting I&D procedures for all other types of activities, except for statutory audits, performed by its members. These activities include assurance engagements, the agreed-upon procedures, among others.

The GEO No. 65 of 1994 authorizes the CECCAR to set I&D requirements for its members who are expert and licensed accountants. For its I&D system, CECCAR has a Superior Disciplinary Commission at a national level and 42 Disciplinary Commissions at a county level which are spread out across its 42 branches nationwide.

Both CAFR and CECCAR indicate that there are several areas in their I&D systems that require further development including: the investigative processes, the composition of its Disciplinary Committee, certain administrative processes, making results of its cases public, and procedures for liaising with outside bodies. In addition, the ASPAAS’s I&D system has some partial gaps in the areas of: results being made available to the public and liaison with other bodies for more serious offences.

Current Status: Partially Adopted

Law 82/1991, also known as the Accounting Law, with its subsequent amendments and supplements, establishes the Ministry of Public Finances (MFP) as the accounting standard-setter in Romania and is responsible for transposing EU regulations that require the application of IFRS as endorsed by the European Commission into national law. EU-endorsed IFRS have slight modifications from IFRS (e.g., temporary 'carve-out' from IAS 39 Financial Instrument: Recognition and Measurement and a temporary extension of the scope of applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts) but according to the IFRS Foundation, these modifications affect a limited number of companies. The majority of companies that do not apply the modifications can state full compliance with the IFRS.

In addition to the mandatory requirements to apply in consolidated accounts, under MFP Order No. 881/2012 all listed companies are required to apply IFRS as endorsed by the EU in their annual financial statements. The MFP has also permitted companies that do not trade in the regulated market to choose between EU-endorsed IFRS for consolidated financial statements or Romanian Accounting Standards.

The MFP is also responsible for approving the accounting standards set by the regulators of banks, insurance, and pension companies. Banks are supervised by the National Bank of Romania. Insurance and pension companies are supervised by the Financial Supervisory Authority (ASF) Each regulator requires entities under its supervision to apply EU-endorsed IFRS.

The Body of Expert and Licensed Accountants of Romania is responsible for the translation of IFRS and IFRS for SMEs into Romanian and indicates it translates new and revised standards as they are issued by the IFRS Foundation.

Current Status: Adopted

Relevant Organizations

• Body of Expert and Licensed Accountants of Romania (CECCAR)
• Chamber of Financial Auditors of Romania (CAFR)
• Ministry of Public Finance
• Statutory Audit Public Oversight Authority (ASPAAS)

Relevant Legislation

• Government Ordinance No 65/1994, as amended
• Government Emergency Ordinance (GEO) No. 90/2008, 2008
• CECCAR Internal Regulation on Organizational and Operational Regulations of the Body of Expert and Licensed Accountants of Romania
• Law No 26, On Amending and Supplementing the Government Emergency Ordinance no 75/1999 regarding the financial audit activity, March 2, 2010
• Law No 162/2017, on the statutory audit of annual financial statements and annual consolidated financial statements
• Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC Text with EEA relevance

Relevant Publications

• Accountancy Europe, FEE Qualification and Market Access Working Party?Structure and Organization of the Accountancy Profession Key features: Romania, 2012.
• --, Definition of Public Interest Entity in Europe, October 2014.
• --, Organization of the Public Oversight of the Audit Profession in Europe, a Survey, March 2018.
• --, Organisation and structure of the profession – key feature – 2020 update: Romania, 2020.
• CECCAR, SMO Action Plan, 2021.
• CAFR, SMO Action Plan, 2021.
• Deac, Marius, Romanian Accounting—A Tale of Two Standards, 2013.
• European Commission, Competent authorities for the tasks provided for in the Statutory Audit Directive (2006/43/EC), February 2010.
• IFIAR, Member Profile: ASPAAS.
• IFRS Foundation, IFRS Application around the World - Jurisdictional Profile: Romania, July 2016.
• --, IFRS Application around the World – Jurisdictional Profile: European Union, April 2021
• World Bank, Report on the Observance of Standards and Codes—Accounting and Auditing: Romania, 2008.