Romanian Accounting Research Articles

Considerations Regarding the Accounting Treatment Applied to Investment Properties (II)

The present article theoretically and practically presents the aspects regarding the accounting treatment for investment properties, in the light of Romanian accounting regulations, both those applying the provisions of the Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 and those in accordance with International Financial Reporting Standards. Therefore, the article addresses the initial recognition and evaluation of investment properties, evaluation after the recognition – the model based on cost and the one based on fair value, the transfer and disposal of the investment properties. In some of the cases, the tax treatment according to the Romanian tax regulations is also presented.

Considerations Regarding the Accounting Treatment Applied to Investment Properties (I)

The present article theoretically and practically presents the aspects regarding the accounting treatment for investment properties, in the light of Romanian accounting regulations, both those applying the provisions of the Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 and those in accordance with International Financial Reporting Standards. Therefore, the article addresses the initial recognition and evaluation of investment properties, evaluation after the recognition – the model based on cost and the one based on fair value, the transfer and disposal of the investment properties. In some of the cases, the tax treatment according to the Romanian tax regulations is also presented.

Prudence vs. Credibility. A Formal Comparative Analysis between Romanian Accounting Regulations and IFRS

Starting from the controversial influence that prudence may have on the credibility of accounting information and from the fact that there are different views of the global accounting systems on this concept, the present research aims to analyze the level of formal convergence between the Romanian accounting regulations and the International Financial Reporting Standards (IFRS) on the application of prudence. In this regard, the requirements for provisions, property, plant and equipment, inventories and receivables were considered, with a focus on asset depreciation and impairment losses, elements that were considered in this case as being representative for prudence in accounting. Using the Jaccard coefficients, the paper compares the requirements of the Romanian accounting regulations, represented by OMFP no. 1802/2014 with the ones presented in IAS 16 „Property, plant and equipment”, IAS 36 „Impairment of Assets”, IAS 38 „Intangible Assets”, IAS 37 „Provisions, Contingent Liabilities and Contingent Assets”, IAS 32 „Financial Instruments: presentation” and IFRS 9 „Financial Instruments”. The results show that the highest degree of convergence is identified for the provisions, and the lowest for financial assets. Also, the requirements on depreciation and impairment losses presented in OMFP no. 1802/2014 differ significantly from those presented in IFRSs.

Timeliness of earnings reported by Romanian listed companies

The paper aims to analyze the quality of financial information, by assessing the timeliness of earnings, using information specific to non-financial companies listed on the regulated section of Bucharest Stock Exchange. The study also seeks to assess the symmetry of actions for the timely recognition of potential gains and losses (components of the economic income) and, if there is an asymmetry, to identify the sense of the temporary gap. The phenomenon is analysed in conjunction with a number of control factors such as the Romanian Accounting Standards (RAS), the International Financial Reporting Standards (IFRS), the degree of indebtedness or the entities’ field of activity. Quantitative analysis performed through econometric models consecrated in the field, such as Basu (1997) and Ball and Shivakumar (2005), reveals that the companies included in the study provide financial information that meets the qualitatively criterion assessed, respectively earnings timeliness. Deepening the analysis has made it possible to identify a timely recognition both for unrealised gains and potential losses, as a result of tests carried out on the whole sample, an advance in what concerns the inclusion of economic lose in the accounting income compared to the recognition of economic gains. The presence of disjunctive factors in the analysis generated a number of particular results. In the case of normally indebted companies that apply the IFRS, a timely recognition of economic gains and losses was noted, without the gap specific to conservatism.

CONCEPTUAL CONVERGENCE OF ROMANIAN ACCOUNTING WITH INTERNATIONAL ACCOUNTING STANDARDS FOR THE PUBLIC SECTOR IN THE FIELD OF TANGIBLE ASSETS/FIXED ASSETS

CONCEPTUAL CONVERGENCE OF ROMANIAN ACCOUNTING WITH INTERNATIONAL ACCOUNTING STANDARDS FOR THE PUBLIC SECTOR IN THE FIELD OF TANGIBLE ASSETS/FIXED ASSETS

ISSUES CONCERNING THE RELATIONSHIP BETWEEN ACCOUNTING AND TAXATION IN DETERMINING FINANCIAL RESULT

The tax result does not reflect the real financial performance of a company but rather shows a result of taxation which is to determine the size of tax for a company. Therefore, in Romanian accounting there are a lot of different ways which are used to obtain an `embellished` accounting result due to a large variety of accounting policies and methods which allows the company to choose the desired outcome. In our county, the main goal of an enterprise seems to be either the decrease of the financial result in order to avoid payment of a bigger tax to the state tax authority or the postponement of it, while companies from other countries want a financial result as big as possible so that they can attract investors. Keywords: financial outcome, accounting, fiscality, accountig policy, revenue, cost, tax

Emerging information technologies in accounting and related security risks – what is the impact on the Romanian accounting profession

This study investigates whether aspiring and professional accountants understand the benefits and security challenges brought by emerging technologies such as: Big Data, data analytics, cloud computing and mobile technologies. 115 participants took part in a survey during January and February 2017, all having at least one year of practical experience in accounting or audit and 80% of them being affiliated with national or international accounting professional bodies. The research has three key findings: (1) Professional accountants and auditors are having in average a theoretical knowledge of the emerging technologies in the accounting field, but they still need to enhance their skills to exploit them efficiently, (2) Mobile technologies started to be adopted by the Romanian practitioners and (3) The profession has become aware of the security risks brought by emerging technologies in the digital accounting. The accounting profession is on the verge of change and the practitioners do not yet possess sufficient skills regarding the analyzed emerging technologies. As per this, the professional bodies and academic environment should reassess their curricula to enforce the necessary changes for preparing practitioners to successfully face the future challenges and avoid their replacement by other professions more qualified.

The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence from Romania

Romanian accounting rules (RAR) had followed a convergence process with International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) since 1999, and the level of convergence has increased over time. The Romanian accounting regulator continues to follow IAS/IFRS in internalizing the Accounting Directive 2013/34/EU. Only a few major differences still exist (some of them due the restrictions in the Accounting Directive 2013/34/EU) between RAR and IFRS. However, RAR lack the level of detail existing in IFRS, and IFRS cannot be used in practice as a source of guidance and interpretation. While major stakeholders have a positive attitude towards the convergence with IAS/IFRS, the Romanian accounting regulator intends to keep the control over RAR and avoid differences in interpretations that might have tax consequences. Despite the good level of convergence of RAR with IFRS, practitioners tend to continue to utilize the tax approach as a source of guidance and interpretation.

Accounting policies and practices applicable for the impairment of assets that generate income other than cash flows

Starting with 2005, at an European level, the European Commission alongside the International Federation of Accountants (IFAC) promoted the implementation of accrual accounting within the public sector and, by default, the shift from cash accounting to accrual accounting, as well as the development of financial statements based on the International Public Sector Accounting Standards (IPSAS). IPSAS’ starting point were the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The requests of the IPSAS Standard 21 “Impairment of Non-Cash-Generating Assets” were drawn up in accordance with this policy. The differentiated practices that can be applied to the public sector in relation to the private sector have led us to the analysis of the solutions suggested by IPSAS 21 precisely to understand and further study the concepts and mechanisms of the depreciation of assets that generate income other than cash flows. Without neglecting the reality of the Romanian accounting practice within the public sector, we will gradually go through the steps of measuring and recognizing the depreciation losses associated with the assets that generate income other than cash flows, owned by the public entities.

APPLICABILITY OF CONSOLIDATED TECHNIQUES IN THE VIEW OF ROMANIAN ACCOUNTING REGULATIONS

The accounting regulations are more and more interested in groups of companies. In some cases, these regulations require for preparing the consolidated financial statements. This is the task of the parent company who keeps the consolidated accounts. To accomplish its goals, the consolidated accounting uses a couple of, so-called, consolidation techniques. These are applied in the case of groups of companies with a complex structure. Their goal is to elaborate the consolidated financial statements using a set of methods and empirical skills. In this article we synthetize and apply the consolidation techniques in the view of Romanian accounting regulations. The Romanian practice has revealed, especially, two techniques: one based on direct consolidation and another one based on multiple levels (phased consolidation). Therefore, this work regards only the technical side of consolidated accounting, accounting records being evaded. Furthermore, we focus only on the preparation of the consolidated balance sheet in the case of some hypothetical groups of companies.

Convergence of Romanian accounting regulations with IFRS. A longitudinal analysis

In this paper we analyse the evolution in the level of convergence of the Romanian accounting regulations with IFRS in the last decade. We focus our study on the accounting topics covered by IAS16, IAS17, IAS 41 and SIC15. We find that in 2005 the regulations exhibit a good level of convergence for property, plant and equipment, a medium level of convergence for lease accounting and divergence for accounting for the agricultural activity. The overall convergence level improved over time for all the topics analysed. These results indicate that the companies with dual reporting may incur lower costs in applying IFRS. Moreover, the national regulations offer the opportunity for a higher level of comparability in Romania of the financial statements prepared under IFRS with those prepared under national regulations. However, we underline that the institutional factors (such as the tax influence over accounting) might negatively affect the convergence of practices.

Convergence of Romanian accounting regulations with IFRS. A longitudinal analysis

Convergence of Romanian accounting regulations with IFRS. A longitudinal analysis

The influence of accounting system regarding accounting and taxation of entities

Abstract Accounting and taxation in Romania at the beginning of the third millennium are in continuous development, as a result of globalization of the world economy and of connecting the accounting and tax system to the international and European one. The confluence of the two representative cultures – Anglo-Saxon and Latin-European – has left a strong mark on the Romanian accounting and taxation. The International Financial Reporting Standards (IFRS) and the European Directives set the line to follow for both the Romanian accounting and the Romanian taxation. We get to ask whether Romania has still got its own strategies of economic, social and cultural development or we are part of a system of strategies where accounting is also included?

Constructive Relationship between Accountancy and the Corporate Governance, Under the Context of Normalization

The relationship between the accountancy and the corporate governance is of interdependency. The economical-financial crises, the complexity of the business environment, the intensification of competition, the demographical issues, the climate changes, and the limited access to the resources are aspects emphasizing another approach of the governance on entity level. The accountancy cannot remain indifferent to the major changes occurring worldwide, in the direction of the globalization of the economy and of the financial markets. The harmonization and the convergence of the Romanian accounting with the International Accounting Standards and with the European Directives are the demarche of a challenge arising around a permanent process of accounting reform.

Influences on accounting: a longitudinal analysis for an eastern European country

This research identifies the factors that influenced Romanian accounting during three historical stages, which cover the period from 1990 onwards. We developed a framework taking into account the political, legal, and professional factors, to whom were associated drivers and metrics specific to the analysis proxy, fair value accounting. Considering the evolution of fair value accounting during the surveyed period, we conclude that in terms of regulations, Romanian accounting follows the system promoted by International Accounting Standard Board and the European Directives. This is due to the relation between a fair value-based accounting system and market globalisation and hence the need for reliable measurements in the financial statements. In addition to the external influences, we provide evidence for the development of the commercial system, a relative fiscal relaxation with favourable influence on accounting options and fair value use, and legal provisions that fostered the development of financial institutions, the capital market in particular, and financial instruments that may support the future use of fair value in individual accounts. Other internal factors, such as the accounting profession, have laid the foundation for a better understanding of the European and international accounting concepts and principles and a stronger acknowledgement of a principle-based accounting model.

Public accounting history in post-communist Romania

Having a longitudinal approach of the Romanian public accounting system’s evolution, this historical study proposes the development of a framework in order to assess in a descriptive manner the change of public accounting and its implications for Romania, a European emerging country. The evolution from cash accounting to accrual accounting took place during three time periods within the timeframe 1991–2015. For each of these time periods we investigated influential factors such as period, place, people, practices, propagation, products, and profession. The study shows that under the influence of the international managerial public reform and the internal factors analysed, the public accounting system shifts from the old values of the post-communist period to new reference bases such as International Public Sector Accounting Standards (IPSAS). The results of the study place Romania, an East European country, on the map of international public sector accounting systems as a relatively new arrival but with serious intentions of integration.

Ethical attitudes of Romanian accountants: evidence from practitioners

The accounting profession, by its nature of public certification, should act in line with ethics and morality. Despite the theory that we all know, various financial failures of big companies are documented in the literature every year. Despite the fact that the accounting profession emphasises the importance of ethics and morality, a 'minima moralia' in the business world is needed more than ever. In this study accounting professionals were asked to assess in terms of ethical acceptance a large variety of questionable scenarios and factors influencing the ethical decision making. In this regard respondents were less-accepting of 11 of 26 vignettes; where the least accepted where the scenarios involving physical harm compared to scenarios violating the law. In terms of assessing the factors influencing the ethical decision making, most of the respondents rated the professional and regulation norms together with supervisory behaviour influence and peer group norms. Factors like religion values, cultural norms or personal standards and personal needs were ranked as having the least influence on the ethical decision making. Limits of the paper are presented and also the scope for future research.

Impact of the IFRS Adoption on Financial Assets and Liabilities. Empirical Evidence from Bucharest Stock Exchange

Abstract The aim of this paper is to study the impact of the transition to IFRS on financial assets and liabilities reported by non-financial companies listed on the Bucharest Stock Exchange. It uses data from the individual financial statements for the comparative year 2011, prepared under both Romanian accounting standards (RAS) and IFRS. Through a set of financial ratios involving information from balance sheet, income statement and cash flow statement, we study how the IFRS adoption affected financial assets and liabilities. We also test the empirical correlation between profitability (measured by ROE) and financial assets/ liabilities before and after the transition to IFRS. We find that financial instruments are very little affected by the change in the accounting system. However, the association between ROE and financial assets/ liabilities is of greater intensity for the IFRS data.

Organisational Theatre In The ESP Classroom: A Romanian Account

Abstract This paper draws on our work with the 2nd year students at the Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, Romania; in our Business English seminars, we brought into play the speeches of Shakespeare’s characters, namely King Henry’s in Henry V as played by Kenneth Branagh on screen and Mark Anthony’s in Julius Caesar by Marlon Brandon, respectively. Overviewing international and national perspectives on organisational theatre and establishing a relation with CLT, in general and ESP, in particular, we will tackle the activities meant to help our pre-experience learners (Ellis and Johnson, 1994; Frendo, 2005) develop their presentation and public speaking skills with the help of the two speeches mentioned above, i.e. the persuasion and the motivational one as coined by literature (Sharma et al., 2010).

Accounting academia in emerging economies: evolutions and challenges

Purpose – This paper aims to investigate the development of accounting academia in an emerging country situated in Central and Eastern Europe. Design/methodology/approach – First, the authors analyze publications in the main three local Romanian journals dedicated to accounting, using content analysis and statistical tests in line with the issues analyzed for accounting publications in the international literature. Second, they mobilize personal experience of, and observations of local developments by, the authors. Findings – The authors find that the decision of establishing a national journal ranking system in Romania in 2005 had both positive and negative consequences. Romanian accounting academics were asked after 2005 to focus on a very short notice on writing research papers, following a long period of communism and about 15 years of post-communism during which they wrote textbooks and professional papers. Journal and university rankings therefore influenced the publication behavior of such researchers, leading to searches for efficiency, ease of publications, publications outside accounting as well as to a difficult publication of their research outcome by internationally relevant accounting journals. Research limitations/implications – Publications in the three Romanian accounting journals for one year were analyzed and the personal experience of the authors mobilized. However, following this study, university administrators and national regulators can better ascertain the effect of their actions, and use these findings to better plan their future actions. Originality/value – This paper contributes to accounting research literature by offering insights into the current state of accounting research and publication in an emerging economy (Romania), and by investigating the institutional factors that may be responsible for this state of affairs.