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Romanian Accounting - A Tale of Two Standards

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  • Marius Deac

    (“Dimitrie Cantemir” University of Bucharest, Romania)

Abstract

The process of accounting harmonization in Europe has started in 1978 with the adoption of the Fourth Council Directive 78/660/EEC regarding the annual accounts of limited liability companies. The harmonization process continued with the regulation of the consolidated annual accounts with the enactment of the Seventh Council Directive 83/349/EEC. In 2002 the European Parliament has adopted the EC Regulation No. 1606/2002 requiring all listed group entities within EU to apply the International Accounting Standards for their consolidated financial statements starting from 2005. This has led to the use of a dual accounting standardization as listed entities are required to use IAS/IFRS while non-listed entities use the national GAAP harmonized with the 4th and 7th directives. The adoption of the new accounting directive 2013/34/EU does not solve this differentiation as it doesn't allow the option for national accounting regulators the use of IFRS for SMEs. Romania, as a member of the European Union, is no exception from this usage of a dual accounting standard. After the fall of the communist regime, Romania has modernized its accounting system by adopting a French inspired, EU 4th directive compliant national GAAP. Between 2001 and 2005 there was a strong interest towards the adoption of IAS/IFRS that went beyond the scope of EC Regulation No. 1606/2002. This has changed in 2005 when IAS/IFRSs were considered as an option of additional voluntary disclosure. From 2006, Romania has aligned its national legislation to the requirements of EC Regulation No. 1606/2002. The application of this dual standard accounting system has been cumbersome especially for the entities that were required to prepare two different annual accounts, one using IAS/IFRS and one using Romanian GAAP. This obstacle has been overcome in 2012 when certain entities were allowed to prepare their financial statements using only IFRS.

Suggested Citation

  • Marius Deac, 2013. "Romanian Accounting - A Tale of Two Standards," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 13(1), pages 89-98.
    • Handle: RePEc:pet:annals:v:13:y:2013:i:1:p:89-98
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    References listed on IDEAS

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    1. Katarzyna Kosmala MacLullich & Calin Gurau, 2004. "The Relationship between Economic Performance and Accounting System Reform in the CEE Region: The Cases of Poland and Romania," CERT Discussion Papers 0406, Centre for Economic Reform and Transformation, Heriot Watt University.
    2. Katherine Schipper, 2005. "The introduction of International Accounting Standards in Europe: Implications for international convergence," European Accounting Review, Taylor & Francis Journals, vol. 14(1), pages 101-126.
    3. Derek Bailey, 1995. "Accounting in transition in the transitional economy," European Accounting Review, Taylor & Francis Journals, vol. 4(4), pages 595-623.
    4. Axel Haller, 2002. "Financial accounting developments in the European Union: past events and future prospects," European Accounting Review, Taylor & Francis Journals, vol. 11(1), pages 153-190.
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    Cited by:

    1. Omar Alhato & Alexandra Botoş, 2021. "Case Study Of The Origin And The Evolution Of Accounting Systems Regarding To The Harmonization Of International Financial Reporting Standards (Ifrs) In Jordan And Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 156-163, July.
    2. Bogdan Oana & Mateş Dorel & Domil Aura Emanuela & Puşcaş Marina Adriana & Puşcaş Ancuţa & Teşu Ramona, 2017. "Accounting practitioners perception over the impact of IFRS implementation on the performance of entities in the construction sector from the western region of Romania," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 27(4), pages 26-36, December.

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    More about this item

    Keywords

    IFRS; IAS; 4th accounting directive; 7th accounting directive; accounting harmonization;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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