Performing an Audit in Romania

From the beginning, we mention that our team of accountants in Romania offers audit services in Romania in accordance with the International Standards on Auditing (ISA) fully adopted by the Chamber of Financial Auditors of Romania. Performing an audit in Romania is achieved by the analysis of an authorized specialist on the overall economic condition of a company, firm or institutional authority as it is shown in the accounting summaries, accounts, balance sheets and cash flows.

Quick Facts
We offer audit services (YES/NO)	Yes
Who needs audit services	– private companies, firms, – public authorities
Types of audits	– financial, – construction, – operational, – tax, – compliance, – investigative
Who can perform audits for companies	Certified financial auditors
Professional investigation of accounts (YES/NO)	Yes
Verification of annual financial statements	At the time an audit is performed
Purpose of internal audit	To discover risk management in a firm
Statutory audits available	On request
Solutions for company management	Offered for better financial activities
Legislation for audits	ISA or International Standards for Audits
We provide inventory audit (YES/NO)	Yes
Audit reports (YES/NO)	Yes
Institution in charge of auditors	Chamber of Financial Auditors in Romania
Status of a financial auditor	Independent
Other types of audits for companies	On request
Companies need a compulsory audit in Romania	If they meet at least two of these requirements on the reporting date and during two consecutive financial years: total assets over 3,650,000 EUR; net turnover – over 7,300,000 EUR; the average number of employees – over 50.
Audit reporting standards in Romania	International Financial Reporting Standards (IFRS)
Audit engagement letter	Required before starting an audit engagement
Audit sampling	Statistical sampling techniques may be used while performing an audit in Romania.
Audit fieldwork	Gathering of evidence and testing procedures
Audit materiality	Determination of materiality thresholds during performing an audit in Romania
Audit communication	Discussion with management and those in charge of governance, i.e; The Statutory Audit Public Oversight Authority (ASPAAS)
Audit review and quality control	Internal and external review of audit work
Audit professional liability	Auditor’s liability for negligence or misconduct
Audit ethics	Compliance with ethical standards and code of conduct when performing an audit in Romania
Audit fees	For small and medium-sized companies, it is expected to be 1200-3600 USD, whereas large corporations may pay 12,000 USD or more.
Audit rotation	Statutory requirement for changing auditors periodically
Audit exemptions	Certain small companies may be exempt from audit.
Audit language	Romanian
Audit disclosure	Auditor’s report is publicly available.

The main elements which define the auditin Romania are the following:

• examination of information which should be exclusively a professional investigation;
• the purpose of an examination of information is to express a correct and relevant evaluation;
• the expressed information must be responsible and independent, which means that the person doing the examination has certain responsibilities;
• the examination should be done by certain pre-established rules provided by a standard or norm which constitutes the legal or professional quality criteria.

Here is an infographic with information about audits in Romania:

What is a financial audit in Romania?

In a financial audit for a company in Romania, the auditor verifies the financial situation presented by the firm, in order to see if it reflects the current status of the business. It is good to know that the company’s management is in charge of offering correct information about the financial situation, but there are cases in which errors are detected. The independent auditors who evaluate the financial status of the company and present the final report can help companies on the market by increasing the confidence among creditors, investors, etc. We mention that the independent financial auditors need to report the situation of the company to the owners and the managers of the firm.

What is an internal audit in Romania?

In order to identify in time the risk management in a company, an internal audit is in most cases the proper solution. The purpose of an internal audit is to see if the risks in a company are properly managed and if the internal control system works accurately. In this sense, the bookkeeping, the acquisitions, the sales and the company’s production are verified. Such an internal audit in Romania is also recommended if there are suspicions of fraud in a company.

Types of companies that can receive audits in Romania

According to the Romanian laws, most companies are subject to different audits and need to present a clear statement of the financial situation and the risk management in the firm. The following situations are linked to the type of audits in Romania:

• companies which, in accordance with the Romanian law, are required to an annual audit of the financial statements, including companies under the supervision of the National Securities Commission;
• companies which, although are not obliged to have an annual audit of financial statements, are interested in an audit report to obtain financing;
• companies where investors want a specialty certification on the annual financial results;
• companies in which investors want to trade shares or stocks.

The annual financial statements for companies in Romania

Legal entities in Romania are obliged to submit the annual financial statements, following a set of criteria and respecting the EU legislation too. The submission of the annual financial statements is regulated by Order no. 2.239/2022, where companies need to deposit form code 10 (the balance sheet) and form code 20 (the profit and loss account). All types of financial statements of companies registered in Romania must be accompanied by the Informative Data and the Statement of fixed assets. Besides these documents, it is necessary to present the external and internal audit reports of companies in Romania. Your Romanian accountant knows how to handle the annual financial statements, in respect to the applicable laws. If you decide to externalize the accounting services for your company in Romania, you can easily get in touch with our accounting firm in Romania and see the kind of services we can provide for your business.

Types of audits in Romania

Several types of audits can be performed in companies in Romania, mentioning that one of our Romanian accountants can provide complete information about each and one of them, on request. Here is what you need to know about a few important types of audits:

1. Financial audit – all the financial statements in the firm are verified and analyzed. It represents the most common type of audit that can be performed by one of our specialists.
2. Construction audit – a construction project normally has a specific budget, so all the contracts, overheads, prices, contractors, reimbursements, and orders can be verified with such an audit. Construction companies in Romania can benefit from such an audit.
3. Compliance audit – all the procedures and policies of specific departments in a company can be verified with such an audit.
4. Operational audit – the operations of a business, including the planning process, the targets and goals can be verified with the help of an operational audit. This can be an external audit.
5. Information systems audit – the ability of IT systems, software development, computer access, and data processing can be reviewed with the help of an information systems audit.
6. Tax audit – the tax returns submitted by a company can be analyzed by such an audit.
7. Investigative audit – fraudulent activities of a company, breaches, and evidence can be part of an investigation. This is where an investigative audit can intervene.
8. First-party audit – performed within an organization to measure the weak points and strengths against intra-company procedures or external standards imposed. This is an internal audit.
9. Second-party audit – this is an external audit performed by a provider on a client, to give an example. The contracts are completely analyzed, in order to make sure that the customer will receive just what he/she requested.
10. Third-party audit – this can be performed by an independent organization from the client or provider, in order to avoid any interest conflicts.

The above-mentioned types of audits can be solicited for a company in Romania. One of our Romanian accountants can explain more in this sense and can be hired for performing an audit in Romania. Please feel free to get in touch with us if you would like to hire the services of our accounting firm in Romania.

What is a statutory audit in Romania?

A statutory audit refers to the audit of individual annual financial statements or combined annual financial statements that are made in accordance with the international audit standards, as it is mandatory under EU and national laws in Romania. Statutory audits can be voluntarily performed at small business entities, mentioning that the audited financial statements must be published, in agreement with the applicable laws.

It is important to note that the statutory audits are performed by financial auditors or by audit firms with authorization in Romania. This means that the financial auditors in Romania must be registered as members of the Chamber of Financial Auditors in Romania and also listed to the electronic public register in Romania. The Authority for Public Supervision of the Statutory Audit Activity (ASPAAS) is the proficient and competent institution accountable for approving the financial auditors and the audit companies in Romania. More than that, it is good to know that ASPAAS approves only individuals or audit companies with a good reputation. For a better understanding of audit services for companies in Romania, please feel free to solicit our support and assistance.

What is an inventory audit?

An inventory audit is an accepted auditing procedure in Romania that comprises internal controls and verifications of the assets of a company. Normally, such an audit will reveal whether the declared assets of a company are available or not. An inventory audit will make a comparison of the inventory turnover ratio, unit costs, gross margin with previous years. In this case, the client or the company will present his/her procedures or policies relating to the inventory count. The auditor will then select a sample or a part of the items for testing and verify if the client complies with the proposed procedures for the count, if they are correctly performed, etc. Likewise, one should note, that a problem might appear and enter the attention of the auditor referring to the timing of the inventory remark. Moreover, for some goods like high-tech products or jewelry, it is unusual for an auditor to be capable or specialized to distinguish between real and fake products. In this case, a specialist for a full inspection might be hired.

Short facts about follow-up audits

A follow-up audit is required for corrective actions that normally cannot be performed at the time the audit takes place. Specific corrections might be necessary, so a follow-up audit can be recommended. If you would like to know more about follow-up audits, please feel free to talk to our team of accountants in Romania. They can propose the necessary types of audits, in agreement with the company’s policies and procedures.

Phases of an audit cycle

The audit planning and preparation represents the first step of an audit procedure, it is made in advance in complete agreement with the auditor and the client. The next step is the audit execution or the execution phase, also named fieldwork that comprises a series of activities and operations. The communication with the auditors is extremely important. The third phase is the audit reporting where the results of the communication are revealed. The audit follow-up and conclusion are part of the fourth phase that closes the audit cycle. All the audit activities are planned and carried out, so the audit procedure can be closed.

We invite you to watch a video about how an audit is made:

FAQ about audits in Romania

Investments in Romania

Romania is an attractive business location for foreign investors. There are numerous large companies with branches and subsidiaries in Romania, that take advantage of an appealing tax structure, simple business formalities and registration, and well-developed industries. Here are some facts and numbers that highlight the business and the economy direction of Romania:

1. Around USD 94,000 million was the total FDI stock for Romania in 2018.
2. Approximately 23% of the foreign investments in Romania came from the Netherlands in 2018.
3. Around 30% of the total investments in 2018 in Romania were directed to the manufacturing sector.
4. The well-educated workforce and the low labor costs are among the business advantages in Romania, appreciated by foreign investors.
5. Around 60% of the total foreign investments are directed by Bucharest.

Audit services we can offer for your company in Romania

Our accounting specialists in Romania are able to offer financial audit consultancy services for all companies which are subject to these requirements, offering a release for the management board. By letting us perform the audit you will not see a financial control as an unpleasant surprise as we are able to provide the necessary advice throughout the year. We offer our services that will provide the overall framework for holding the entire audit in good condition by offering complete financial audit preparation services in Romania.  Our Romanian team is able to provide you a complete review for the financial statements when the accounts are finalized and you want to achieve a review in accordance to the International Accounting Standards. We also provide you the qualified certification of annual financial statements, recognized by the Romanian Ministry of Finance.

For further information and customized advice, please contact us.