Academy of Economic Studies, Bucharest [600257]

Academy of Economic Studies, Bucharest
Accounting, Audit and Management Information Systems
Master Program

The application of IFRS in Romania

Coordinator:
Prof. Nadia Albu

Students:
Cristea Lavinia -Mihaela
Curelea Elena -Alexandra
Curt A lexandra
Dinu Cristina -Daniela
Doltu Gina -Andreea
Eftenie Cristina -Nicoleta

2
1. The accounting practices regarding the IAS/IFRS in the various
stages of the accounting reform in Romania

The fall of communism in 1989 announce an era of rapid and dramatic political and
economic change. After that, Romania applied for EU membership in 1993 and during the late
1990’s and early 2000s, the privatisation of large entities, a flow of foreign investment and a
process of economic reform led to signigicant impro vement in the economy .1
After the fall of the communist regime, company accounting was shaped by two waves of
reform. From its very beginning, the process of accounting regulation was a public one, deriving
from a legislative process where the
Ministry of Finance is the main actor.
The first wave of reform came in the early 1990s with the Accounting Law which aimed
at introducing an accounting system adequate for a market economy, a system that allowed an
‘efficient control of the legality of commercial t ransactions and of the fulfilling of the fiscal
obligations. Company law, also passed in 1991, required public companies and certain private
companies to have an odd number of censors elected by shareholders from among themselves
with the exception of the accountant censor.
The regulations that implemented the Accounting Law, effectively applied on 1 January 1994,
had their inspiration in the French accounting system and came with the stated objective of
creating an accounting system compatible with the Fou rth Council Directive2 and International
Accounting.
A second wave of reform started in 1996, when the goals of the Romanian Accountancy
Development Programme sponsored by the UK’s Department for International Development
superposed with the requirements of international financial institutions. The World Bank’s PSAL
I and PSAL II loan agreements had among their objectives improving the business environment
and required the Romanian government to modernize the accounting standards and to implement
internati onally recognized accounting standards The rationale was that such an accounting
framework would create a favourable environment for direct investment and privatization. It’s
consider that the Romanian government based its decision to adopt IAS/IFRS on fi nancial
grounds, while pursuing in
parallel harmonization with the European Directives – as part of the political objective of joining
the European Union. Consequently, in 1999, the Ministry of Finance issued a Harmonization
Regulation seeking to harmonize Romanian large enterprise individual account.2

1 International Financial Reporting Standards in an Emerging Economy Lessons from Romania Nadia Albu, Catalin N icolae Albu
2 An Empirical evaluation of the cost of Harmonizing Romanian Accounting with International Regulations , Ion Ionascu, Daniela
Artemisa Calu

3

Year Event
1990 Start of romanian accounting system reform who has been dominated by references to
the 4th Directive and French practices.
1991 24 of December Accoounting Law is published . 82/1991 Law
 required public companies and certain private companies to have an odd
number of censors elected by shareholders.
 lead at the introduction of an accounting system adequate for a market
economy, a system that allowed an ‘efficient control of the legali ty of
commercial transactions and of the fulfilling of the fiscal
obligations’
1993 Government Decision no. 704 of 14 December 1993 for approving certain
measures of implementation of the Accounting Law no. 82/1991
1994 1st of January – Impl ementation of Accounting Law which involves the existence of an
general chart of accounts, methodological norms for the usage of accounts, new
accounting principles, valuation rules, standard formats for the financial statements;
The regulations that imple mented the Accounting Law, had their inspiration in the
French accounting system and came with the stated objective of creating an accoun ting
system compatible with the Fourth Council Directive2 and International Accounting
Standards
1994 Government Decis ion nr. 65/1994 re -establishment of the Body of Expert and
Licensed Accountants of Romania (CECCAR)
1996 Was a point of reference in the stages of reform of romanian accounting system
because of the loans granted by World Bank. The World Bank imposed some
conditions for those loans such as improve the business environment and demanded
Romanian government
modify accounting standards and capitalize on recognized accounting standards
internationally
1997 In order to complie the conditions imposed by the World Bank the romanian specialists
dropped the counseling offered the French and began to receive counseling from
British government assistance through ICAS (Institute of Chartered Accountants of
Scotland), under the Know How Fund.
1999 Order of the Mini ster of Finance no 403 published on 22th of April to harmonize the
individuak accounts of large enterprises with the Fourth Council Directive and
International Accounting Standards. This Harmonization Regulation mantains the
accounting chart, it provides f or more disclosure within the model format for the
financial statements

4

1999 -2005 was a period of Harmonization Regulations
Objectives:
 2000 – Regulations consistent with the Seventh Council Directive.
 2001 – To harmonize the individual accoun ts of large enterprises with the Fourth Council
Directive and with International Accounting Standards
 2005 – To enact Fourth and Seventh Council Directives3
2000 -2005
 Mandatory use for large entities
 Which IAS/IFRS ->IAS with carve outs( consolidation inflation), but part of the national
regulations . Representatives of the Ministry of Finance argued that, where IAS/IFRS did
not conflict with the European Directives, the IAS/IFRS treatment was to be preferred
(Albu et al. 2011)
 Which entities use IAS/IF RS -> Only o few of the entities required by the regulations.
About the half of listed entities used IAS, with probably a much lower rate of use by
other large entities. Some entities adopted dual reporting.4

2006 – present was a period of Conformity Reg ulations

Objective: 2006 – The enact Regulation (EC) no.1606 of the European Parliament and of the
Council.

2006
 Mandatory use for a few public interest entities (bank and financial institutions as a
second set). Other public interes entities were allowe d if they had the resources.
 Which entities use IAS/IFRS -> A few listed entities or subsidiaryes of multinationals.
2007 -2011
 Mandatory use for listed group and banking institutions, in their consolidated financial
statements. Optional as a second (indivi dual and/or consolidated) set for other public
interest entities.5
 Which IAS/IFRS ->IFRS, as adopted by EU

3 Ionașcu, I., Ionașcu, M., Olimid, L. and Calu, D.C. (2007) “An Empirical Evaluation of the Costs of Harmonizing Romanian Acco unting with
International Regulations (EU Directives and IAS/IFRS)”, Accounting in Europe , vol. 4, no. 2: 172
4 Albu, N. & Albu, C. N. (2012) IFRS in an emerging economy: Lessons from Romania, Australian Accounting Review , no. 4: 346
5 Ionașcu, I., Ionașcu, M., Munteanu, L. (2011) Motivații și consecințe ale adoptării IFRS: percepții privind factorii instituț ionali din mediul
românesc, Audit Financiar , no. 12: 35

5
 Which entities use IAS/IFRS -> Only some entities required by regulations. Voluntary
adoption as a second set of financial statements presumably as a result of user demand
2012
 Mandatory use for all listed entities, for bank, in their individual and consolidated
financial statements. Entities under CNVM (Comisia Nationala a Valorilor Mobiliare)
supervision (i.e, investments funds) are required to prepa re a second set of financial
statements in accordance with IFRS ( for 2011, 2012).6
 Which IAS/IFRS -> IFRS, as adopted by EU
 Which entities use IAS/IFRS -> Only some entities required by regulations. Voluntary
adoption as a second set of financial statemen ts presumably as a result of user demand
In 2007, IFRS as adopted by the EU became mandatory in the consolidated financial
statements of listed and financial entities. As of 2012, they are also required in the financial
statements of non -consolidating list ed entities and banks.
Conclusions:
Application of IFRS in Romania is a complex problem. On the one hand, call the national
regulations to the concepts, vocabulary and referential treatments under international are a
necessary process, which provides the definition of universal accounting language and uniform
practices.
From this point of view, Romania has made great strides in the period in which a number
of Romanian companies applied accounting regulations harmonized with the 4th European
Directive and the International Accountind Standards. The attitude of supervisors and various
public entities is different. It is also discussed the challenges they have created these rules of
professional accountants. The other hand, the introduction of IFRS know some form of rejection,
caused by misunderstanding of the conceptual issues and processes, generated mostly from the
context that in Romania there are no real short term needed to apply them.7
2. The costs and benefits related to IFRS implementation

The impact of IFRS adoption in Romania
IFRSs’s adoption is expected to trigger three primary benefits:”to eliminate barriers to
cross -border investing; to increase the «quality» of financial reports; and to decrease the cost
of capital” (Brown, 2010).
IFRSs ar e focused on relevance and faithful representation, with an emphasis on fair
value and with extensive disclosure requirements, aiming at providing capital suppliers with high
quality financial information. Thus, IFRSs are expected to increase the cr edibility of
financial information in the adopting jurisdictions, which should become more relevant in the

6 Albu, C., Albu, N., Alexander, D. (2014) When global standards meet the l ocal context – Insights from an emerging economy, Critical
Perspectives on Accounting , vol. 25: 504
7 Botez D., (2011), Some aspects regarding reform of Romanian Accounting Sysyems, http://oeconomica.upm.ro/O_V/2_DanielBotez.pd f

6
investing decision -making process, helping users to better predict companies’ future
performance. The increase quality of financial repo rting is expected to reduce the information
asymmetry, and risk, and thus decrease the cost of capital.
The research results obtained so far at an international level, although not non
equivocal, show that, after IFRS adoption, the quality of fin ancial information has increased, the
share prices have become more correlated with accounting data, analysts’ forecast accuracy
has improved, and even the cost of capital has declined.
There are also collateral and less investigated benefits of IFRS worldwide
implementation, such as the effects on the labor market, as the “wide spread of IFRS would
improve carrier opportunities for professionally -qualified accountants and increase the flexibility
of supply”, but also the benefit of “sharing with other countries the costs of standard -setting and
of securing compliance with accounting standards” (Brown, 2010).

Benefits of IFRS adoption
Ionascu et al. (2011) investigated the perception of financial directors of listed
Romanian companies, out of which 51.4% already applying IFRS in consolidated financial
statements and 32.4% in individual accounts, on the benefits of IFRS adoption. The paper
distinguished between desirable effects of IFRS implementation on the quality of financial
information, and other economic benefits. As regards to the impact of IFRS on the quality of
financial information, most respondents indicated the benefit of international comparability
(78.4%), the use of fair values (62.2%), and the r equirement for extensive disclosure (45.9%).
And as economic benefits, the financial directors indicated the increased relevance of IFRS
compliant financial information for the market (86.5%), for the management team
(56.8%), but also the possibility of accessing external financing.
The general opinion of accounting professionals, as measured by Sacarin et al. (2013),
ranked increased transparency and comparability, and attractiveness to investors as the first
benefits of IFRS ado ption in individual financial statements, followed by a greater relevance of
IFRS financial information for managers. Both financial directors of listed Romanian
companies (Ionascu et al., 2011) and accounting professionals in general (Sacarin et al.,
2013) ranked last the benefit of a decreased cost of capital for companies applying IFRS.
In the banking sector, preparers also ranked comparability and transparency as first
benefits of IFRS adoption, closely followed by increased relevance to inve stors and managers
and harmonization of internal and external reporting (Girbina et al.,2012). Lower cost of
financing is again ranked last as an economic benefit.
Prepares of financial entities supervised by CNVM (as investigated by the
Romanian Brokers’ Association – in Danescu et al., 2013), perceive the potential of obtaining
foreign equity financing, and increase comparability as benefits of IFRS adoption. They
also acknowledge a benefic increase in the qua lity of accounting professionals involved
in drafting of financial statements compliant with IFRS.
As regards the perception of users, Ionascu and Ionascu (2012) tried to capture the
perception of Romanian financial analysts on the role plaid by IFRS in increasing forecasts
accuracy. Overall, the majority of respondents (70%) consider that the application of IFRS
will substantially decrease forecasts errors, and they indicated comparability at an international
level (mean score 4.45), and th e use of fair values together with extensive disclosure
requirements (mean score 4.15) as the main IFRS characteristics that can increase forecasts

7
accuracy. Albu and Albu (2012), who also targeted the perceptions of users (two interviews with
bankers and one with a business analyst and consultant for banks), indicated that, at least to some
extent, the benefits of IFRS adoption are deemed to have been materialized “in the form of
increased transparency and comparability, and ‘better’ information for investors and other
users”. Other benefits, such as an increased efficiency of the market or a decreased cost of
capital, are perceived as potential benefits not yet substantiated.
Besides the body of research focusing on perceived benefits, the re are a few studies
investigating the actual impact of IFRS adoption in Romania. Thus, Mihai (2008) focused on
the effect of accounting regulations harmonized with IFRS on the quality of financial
information, construed in terms of the l evel of asymmetric timeliness of earnings. Running
Basu (1997) regression model for a number of 235 firm -observations collected for the years
2000 -2004, Mihai (2008) showed that harmonizing Romanian accounting with IFRS din not
significantly incr ease the quality of accounting data.
Filip and Raffournier (2010) also focused on the harmonization with IFRS phase and
investigated the value relevance of earnings on Bucharest Stock Exchange for the period 1998 –
2004. They found that after the applica tion of the regulations harmonized with IFRS, the value
relevance of earnings slightly increased from 0.212 to 0.233, although such a conclusion was
regarded with caution as the value relevance of earnings was highly volatile throughout the
period investigated.
Mihai et al. (2012) investigated the impact of the harmonized regulation on the cost of
capital of listed Romanian companies and found that the cost of capital decreased from
0.33 to 0.132. These results should also be interpret ed with caution, as the model used had no
control variables for market inefficiency and forecasts accuracy.
Tiron -Tudor and Ratiu (2010) focused on the quality of financial information
provided by listed Romanian groups that started to ma ndatorily apply IFRS in consolidated
financial statements starting in 2007. They showed that transparency increased in consolidated
financial statements compliant with IFRS during the period 2006 -2009.

Costs related to the IFRS adoption
Although th ere is no consensus among the academic literature regarding the costs of
IFRS adoption in Romania, the papers studied so far have focused on several common factors
which reduce the benefits mentioned in the previous section.
Firstly, it is worth mentionin g that the adoption of IFRS in Romania affects mainly the
performance of the companies which apply them for the first time. In this regard, Big 4
experienced auditors claim that the long -term benefits will exceed the costs as IFRS reporting
becomes a routi ne process in the company. While the listed companies have mandatory adopted
the International Financial Reporting Standards (IFRS) for consolidated financial statements, the
individual financial statements are compulsory to be reported under IFRS only fro m 20128 on.
A primer study on this issue was conducted by Ionascu et al. (2007) with the help of
questionnaires distributed to 62 entities listed on the BSE. The researchers discovered that the

8 Brad, L ,Dobre, F., Turl ea, C. , Brasoveanu, I.(2014) . The impact of IFRS adoption in Romania upon the earnings
management of the Bucharest Stock Exchange entities. Available at:
http://www.sciencedirect.com/science/article/pii/S2212567114005504

8
main adoption costs consisted of additional training, adjustm ent of information systems,
consultants’ fees, and preparing financial statements under two methods . The report shows
that the average implementation cost was estimated to be EUR 30,000, which represents 0.035%
of the average operating expense of the entit ies analyzed. Moreover, research shows that the cost
of IAS usage in Romania is lower than in other countries, as a result of only partial
implementation.
In the same line of thought, Albu and Albu (2012) performed an in -depth analysis by
interviewing aud itors, academics and preparers. Their results not only confirmed the previous
research but emphasized that there are additional costs from preparing up to three sets of
reports (IFRS compliant, national regulations compliant, and for taxation purposes), increased
auditing costs and higher cost for using IFRS as a sole basis of accounting ( instead of
restating financial statements compliant with national regulations).
What is certain is that the transition to IFRS required a period of training for both th e
company (the management) and the directly involved personnel. The changes in the accounting
policies, procedures, as well as in the rules of elaborating the multi annual income and expenses
budgets according to the IFRS, the implementation of new calculu s methods and modification of
the information flows within the company, require internal processes adaptation. In this regard,
Danescu et al. (2013) also noted two important categories of entity -level costs such as the
development and implementation of new IFRS -compliant accounting systems and
reporting functionalities (IT systems) and human relations costs (recruitment and training of
additional HR resources to implement IFRS, or to replace existing resources committed to IFRS
implementation).
On the oth er hand, Girbina et al. (2012) investigated the costs of IFRS adoption in the
banking sector in 2011 and their findings show that prepares from banks are concerned about
additional costs related to satisfying multiple reporting requirements (accounting, pr udential
and fiscal) and even fiscal costs related to IFRS adoption.
Lastly, there could be other undesirable effects of IFRS adoption, such as a potential
increase in earnings managements, due to the standards’ flexibility, or a decrease in auditors’
independence, as the auditors often provide consultancy services for IFRS implementation.
In summary, it could be stated that the benefits and costs of IFRS implementation in
Romania are highly dependent on the local context in which IFRSs are applied, on th e stage of
development of the market economy and of the accounting profession, and on the actions of the
national regulator.
3. The attitude of accounting professional related to IFRS/IFRS for
SME adoption?

Romanian professional accountants’ perception on t he differential Financial reporting for
small And medium -sized enterprises

The results indicate that more than a half of respondents consider that the current
regulations do not provide a reasonable level of simplification for SMEs and, consequently, a
more simplified reporting system is needed for these entities; only very few respondents consider
than the IFRS for SMEs in its current form is adequate.

9
Through our study we want to identify the attitude of Romanian professional accountants
about the financ ial reporting of the small and medium -sized enterprises.
In this context, we have some questions:
1. Do they want a simplified financial reporting system for the small and medium -sized
enterprises?
2. Should this financial reporting system be designed starting from the European directives or
should the IFRS for SMEs prepared by the IASB be applied as such?
3. Should this financial reporting system be based on detailed rules or on principles and
professional judgment?
4. What should be the criteria for the identific ation of small and medium -sized enterprises?
5. Which is, in the professional accountants’ view, the main user of the financial statements
prepared by the small and medium -sized enterprises?

The IFRS for SMEs mentions the categories of external users of the general financial
statements prepared by the small and medium -sized enterprises:
 owners who are not involved in managing the business;
 existing and potential creditors;
 the credit rating agencies (IASB, 2009).

Moreover, other categories of users have al so been identified for the small and medium –
sized enterprises:
 tax authorities;
 administrators;
 mutual and pension funds;
 insurance companies;
 banks.

The investors of public enterprises use the financial information to decide what to do, if
should sell or keep the stock; for the owners of small and medium -sized enterprises is important
the independence and participation in a business or managing their own business. For the
investors of SME it is not so important to compare the information in the financia l statements
and much of the information requested for the public entities is less relevant.
The main argument against the differential reporting is the need for universality .
This differential:
1. will diminish the comparability and credibility of accounting information9;
2. the movement from one reporting system to another may be perceived as costly and
burdensome.
3. The opponents of differential reporting also argue that the existence of differential standards
may result in a lower quality – there is even a fe ar of division of the accounting profession.

9 Roberts & Sian, 2006

10
However, the small and medium -sized enterprises have had the possibility to opt for the
basic or the simplified system.
From the accounting point of view, the difference was limited to the information
disclosed in the financial statements, without targeting aspects dealing with the recognition and
measurement.
In fact, the difference between the two systems was related to the more detailed structure
of the basic system compared to the simplified one. The set of financial statements, however, had
the same components, irrespective of the system: balance sheet, profit and loss account and notes
(annexes) and the balance sheet and the profit and loss account had to be accompanied by the
censors’ report.
Starting wit h 2006, the accounting in Romania has entered the stage of compliance with
the European directives and the International Financial Reporting Standards. By Order of th e
Minister of Public Finance no 907⁄2005, the companies were divided in:
1. those who were to apply the accounting regulations in line with the European directives
2. companies which apply, additionally, for the information needs of the users, others than the
state, international financial reporting standards, starting with the 2006 financial year.

LITERATURE REVIEW
Based on a theoretical approach, we will present several studies which analyzed various
aspects of financial reporting for small and medium enterp rises in the Romanian context:
Paunescu ( 2006 ) – a famous author – believed that a less complex international financial
reporting standard would be gladly embraced by the SMEs in Romania and would be helpful in
improving comparability of financial report ing.
Also, the implementation of an international financial reporting standard for small and
medium enterprises in our country have been examined. Gîrbină & Bunea ( 2007 ) invoke the
frequent changes in the international accounting referential and companie s, which means a
forced various costs, on a regular basis. This changement is in conflict with the motivation of
simplified reporting, namely cost reduction.
Furthermore, the authors10 consider that regulation of accounting for small and medium
enterprises is a national or regional problem, in the case of the European Union.
The main advantages are:
 the improvement of financial communication;
 the enhancement of the quality of information used by the management of entities.
Difficulties would be involved:
 by the translation of the international financial reporting standards Romanian;
 by the training of professionals on their implementation.

Farcane & Popa (2008) have reviewed the role and objectives of IASB in developing a
standard those enterprises, but al so the reasons and the disadvantages associated to such
standard.
In an exploratory study, Albu et al. (2010), study the context of a possible
implementation of the IFRS for SMEs in our country. The conclusion of the author come to that

10 Tiron & Muțiu, 2008

11
the implementation of the standard for small and medium enterprises developed by IASB is
inevitable in our country, as long as the national standard setter does not develop high quality
accounting standards.
Săcărin (2010) attempted to identify the attitude of those who had sent comment letters to
the exposure draft to IASB’s initiative of developing the IFRS for SMEs. Consequent to
examining the 160 comment letters, he concluded that most of the respondents (44%) had not
expressed an explicitly favourable position to IASB’s approach of developing the standard, 13%
had not agreed with IASB’s approach, whereas 43% had explicitly supported IASB’s approach.
In our country, empirical studies on the need for differential financial reporting for small
and medium enterprises are almo st nonexistent. Having in mind this need, it is worth mentioning
the study undertaken by Deaconu et al. (2009). The authors tested the opportunity in our country
of adopting the standard developed by IASB for small and medium enterprises. After questioning
a number of accounting professionals, it has been found that an accounting standar or accounting
regulations, but the adoption of the standard developed by IASB has not been accepted and the
financial reporting generates unjustified costs.

RESEARCH RESUL TS
In order to identify the companies falling within the scope of the standard, IASB selected
qualitative criteria, yet left at the discretion of regulatory authorities and standard setters in each
country to determine the entities required or permitted to apply the IFRS for SMEs.
Unlike the IASB, the Fourth Directive of the European Economic Community uses
quantitative criteria to determine the companies for which certain simplifications of financial
reporting are stipulated: total assets, turnover, and a verage number of employees during the year.
Similarly, in our country, it is still the quantitative criteria that are used in order to identify the
companies preparing simplified financial statements.
After statistical processing of the responses, we concl ude that most respondents (87.4%)
consider quantitative criteria as more appropriate than the qualitative criteria established by the
IFRS standard for SMEs (12.6%).
Opinions are divided between the preference for the criteria under the Order of the
Minist er of Public Finance (OMFP) No 3055/2009 (46.3%) and for the criteria established by the
European Commission (41.1%). Women (52.6%) rather prefer the criteria stipulated in the
national legislation, while 49.1% of the male respondents are in favor of those established by the
European Commission.
The preference for quantitative criteria is consistent with the existing trend in the
European Union, where most Member States have introduced quantitative criteria in their
national legislations for identifying sma ll and medium enterprises. Although qualitative criteria
are very easy to apply, their determination is not free of difficulty (Roberts & Sian, 2006: 7).
For instance, the average number of employees may be distorted by an increased number
of part -time an d occasional employees or by outsourcing some activities, whereas the value of
assets is influenced by the measurement basis used.
The solution favored by most accounting professionals is to amend the Order of the
Minister of Public Finance (OMFP) 3055/200 9 by introducing several simplifications for small
and medium sized enterprises (43.2% of the respondents have been in favor of this solution).
Conversely, very few are those who believe that the implementation of international financial

12
reporting standard for small and medium sized entities is an appropriate standardization solution
in Romania (4.2%).
Although OMFP 3055/2009 provides for the possibility of a reasonable disconnection,
accountants of small and medium enterprises prefer to keep the accounting policies consistent, as
far as possible, with the tax rules. The reasons are multiple:
 avoiding additional work arising from the reconciliation between the accounting result
and the tax result;
 the difficulty to convince administrators and owners of smal l businesses to bear higher
costs associated with software adjustments for ensuring the implementation of accounting
rules appropriate for the business, but different from tax rules;
 the education level of accountants of small businesses concerning the imp ortance of
financial reporting;
 the poor enforcement of compliance with accounting rules for entities that are not subject
to auditing requirements.
7 out of 10 respondents believe that accounting regulations for SMEs should be based on
detailed rules. Why ? Because Romanian accountants and especially the accountants of small and
medium enterprises are dependent on detailed rules, on regulations that should provide the
representation of transactions and events.

* The most important year in the Romanian’s A ccounting was 2009 by introduction of
International Financial Reporting Standard for the Small and Medium – Sized Entities. The
following paper analyses previous studies about the attitude and perception of professional
accountants regarding IFRS for Small and Medium -Sized Enterprises adoption in Romania.
Some authors analyzed different aspects of financial reporting for small and medium
enterprises in R omania. An example can be:

1. In 2010, Albu examined the possibility of implementation of IFRS for SMEs in Romania but
he came in conclusion that this implementation is inevitable for our country because the
national standard setter is not developed at high accounting standards.(Albu et al., 2010)

 Research methodology
Based on previous relevant literature r eview, a survey questionnaire regarding IFRS for
SMEs possible adoption and opinion of Romanian professional accountants was developed.
The purpose of the questionnaire was to determine the licensed accountant’s opinion
(CECCAR members) on certain aspects of SMEs financial reporting and IFRS for SMEs
knowledge and perception. The questionnaire included 15 questions at which responded 90
members of CECCAR. ( www.ceccar.ro )

13

Fig. 1. Satisfaction level of the certified accountants regarding the Romanian
national accounting regulation.
According to the chart below as a result of the
study, around 65% of the certified accountants are
satisfied with Romanian national accounting
regulation (OMFP 3055/2009) and only 17% are
dissatisfied wanting to change it.

Fig.2. Ways of improving SMEs financial reporting.
For more detailed informations, professional
accountants were asked to select the way which
leads to improvements of Romanian national
SMEs financial reporting. The results are:
 25% said that it is necessary to reduce
the number of accounting options;
 2% thought that it has to be increased
the number of accounting options;
 Reducing the amount of information
presented in the financial statements;
 4% said that it can in crease the volume
of information presented in the financial
statement

 6% didn’t know a way to improve the financial
reporting;
 8% said that it’s not necessary to change the current
regulation.
Less than half of the respondents consider that applying IFRS for small and medium
enterprises is a great and advantageous opportunity and 40% of them think that IFRS could be an
alternative to Romanian small and medium enterprises financial reporting.
In conclusion, the Romanian professional accountants are partiall y satisfied with current
Romanian national accounting regulations. Also, they are aware of the existence of IFRS for

14
References:
1) Albu, N. and Albu, C. (2012). International Financial Reporting Standards in an Emerging Economy
Lessons from Romania. 1st ed . Australian Accounting Review.
2) Albu, C.N., Albu, N. & Fekete, S. (2010) “The context of the possible IFRS for SMEs
implementation in Romania. An exploratory study”, Accounting and Management Information
Systems, vol. 9, no 1: 45 -70
3) Brad, L ,Dobre, F., Tu rlea, C. , Brasoveanu, I.(2014) . The impact of IFRS adoption in Romania upon
the earnings management of the Bucharest Stock Exchange entities.
4) Brown, P. (2010) ‘International Financial Reporting Standards: What are the benefits?’,
5) Danescu, T. & Spatacea n, O. (2013) .Research on the transition to IFRS of investment firms,
Financial Audit, no. 12 : 25 -36
6) Deaconu, A., Pop, I., Buiga, A. & Fulop, M. (2009) „Conceptual and Technical Study Regarding
Future Accounting Regulation for SMES in Europe”, Theoretical and Applied Economics, vol. I
(January): 19 -32
7) Farcane, N. & Popa., A. (2008) „Recent evolutions regarding IFRS for SMES”, Accounting and
Management Information Systems, Supplement: 324 -333
8) Filip, A. & Raffournier, B. (2010) “The value relevance of earnin gs in a transition economy: The case
of Romania”, The International Journal of Accounting, vol. 45, no. 1: 77 –103
9) Girbina M., Minu, M. & Bunea S. (2012) .Perceptions of preparers from Romanian banks regarding
IFRS application , Accounting and Management In formation Systems, vol. 11, no. 2: 191 –208
10) Ionascu, I., Ionascu, M., Olimid, L. & Calu, D.A. (2007) .An empirical evaluation of the costs of
harmonising Romanian accounting with international regulations (EU Directives and IAS/IFRS),
Accounting in Europe, vol. 4(2):169 -206
11) Ionascu, I., Ionascu, M. & Munteanu, L. (2011). Motivations and consequences of IFRS
implementation: perceptions on the Romanian institutional factors, Financial Auditno. 12: 33 -41
12) Mihai, S. (2008) .The impact of international accounting standards on the efficiency of the Romanian
accounting reporting model. in Ionascu, I. (eds.) The internationalization of accounting : evolutions
and consequences in the Romanian environment, Ed. ASE, pp. 92 -111
13) Păunescu, M. (2006) „Good news for Romanian companies: IFRS for Small and Medium – sized
Entreprises (SMES)!”, Accounting and Management Information Systems, Supplement 2006: 648 –
656.
14) Sacarin, M., Bunea, S. & Girbina, M. (2013) .Perceptions of accounting professionals on IFRS
application at the indi vidual financial statements: evidence from Romania, Accounting and
Management Information Systems, vol. 12, no. 3: 405 –423
15) Săcărin, M. (2010) „Standardul International de Raportare Financiară pentru întreprinderile mici si
mijlocii: susținere si percepții” , Contabilitate, Expertiză si Auditul Afacerilor, no. 10: 36 -41
16) Tiron -Tudor, A. & Ratiu , R.V.(2010) .How transparent are companies listed on the Bucharest stock
exchange when disclose them consolidated financial statements?, Annales of Apulensis Universit y,
Economic Series, vol. 12(1): 185 -190
17) Tiron, A. & Muțiu, A. (2008) „Pro and contra opinions regarding a SME accounting”, Annales
Universitatis Apulensis Series Oeconomica, vol. I: 71 -82
18) CECCAR (Body of Expert and Licensed Accountants of Romania). Rules o f organization and
functioning of the Body of Expert and Licensed Accountants of Romania. [Online]. Available:

ROF