Romania’s Post Communism Accounting Practices and the Effects of Adapting Ifrs for Smes

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Romania’s Post Communism Accounting Practices and The Effects of Adapting IFRS for SMEs Abstract Romania, located in southeastern European, was heavily influenced by the Russian Soviet Union as a socialist republic between 1947 and 1989. With becoming a capitalist country in 1989, its accounting practices began its transformation. The purpose of this paper is to analyze Romania accounting practices post its revolution. The paper discusses three major accounting practice conversions made in Romania post communism. Included in this paper are comparisons of previous practices and the implications presented within each practice; along with the pros and cons and many challenges that are associated with the…show more content…
Romania adaption of a French Accounting System was based on a close relationship based on similar economic and social environments. During this time, the French Accounting System was limited and based solely on converting from a cash basis of accounting to an accrual basis. By 1996, Romania’s rapid economic improvements had surpassed that of the simplicity presented in its current French accounting system and began to transform. Anglo-Saxon Accounting Approach Beginning in 1996, Romania joined the Accounting Systems Development Program. The program created by the British government, provided assistance to the Romanian Ministry of Finance through consulting services. In joining the program Romania was required to meet certain conditions. Albu et al.’s (2011) reports describes the conditions as followed: The funding came with several conditions: the application of International Financial Standards (IFS) by several large companies; the requirement to be audited against IFS and International Standards of Auditing; the requirement for the Ministry of Finance to issue guidance for the implementation of IAS; and the creation of the institution responsible for the activity of financial auditing (p.159). In 1999, Romania’s involvement in this program resulted in the harmonization of European Derivatives with an IAS influence, making up the Anglo-Saxon accounting approach. In the study of Deaconu and Buiga

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