Accounting for Leases: Differences between Romanian Regulations and IAS 17

Abstract

International accounting harmonization represents a complex process that plays an important role in the accounting profession. This research provides a comparative analysis and the measurement of formal harmonization of lease accounting treatment proposed by two sets of accounting regulations: the Romanian legislation (the Ministry of Public Finance Order no. 3055/2009) and the International Accounting Standard (IAS) 17 Leases, both valid on 31.12.2011. In this respect, the research methodology is based on closely analysing the regulations mentioned above and determining the similarity and dissimilarity coefficients, in order to assess the progress of national accounting regulations in converging with the International Accounting Standard. This study provides statistical evidence that the level of convergence between the national and international accounting treatment for lease transactions achieved in 2011 is 22% in terms of complexity and requirements imposed by the six criteria analysed in the research. In addition, by calculating the coefficients of similarity and dissimilarity for each criterion, the study demonstrates that the recognition of a financial lease is the criterion with the greatest similarity coefficients and the lease disclosure differs totally in the two regulations. This study contributes to the development of lease accounting and literature in the field, considering that it is a topic that is very much debated in the later years by the inclusion in the agendas of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) of a joint project regarding accounting for these transactions.