Preparation of Annual Financial Statements in Romania
Preparation of Annual Financial Statements in RomaniaUpdated on Tuesday 30th July 2019
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In Romania, commercial companies, national autonomous administrations, national institutes of research and development, cooperative societies and other legal persons operating for profit shall be bound to double entry bookkeeping to prepare annual financial statements. For organizations and trade unions, as well as for other non-profit organizations, which carry out economic activities, the Romanian Ministry of Finance approved a simplified financial reporting procedure, considering the requirements of European organizations in the field. Our Romanian accountants are at your disposal with complete support and assistance when preparing the annual financial statements. The same team can handle internal and external audits in Romania, so feel free to address to our team of consultants.
How do I submit the annual financial statements in Romania?
In Romania, the financial statements are submitted in different conditions for legal entities, in accordance with the economic indicators, as regulated by the Directive IV of the European Economic Community. There are three size criteria set out by the regulations: the value of total assets, the net turnover, the average number of employees. Here is information about the needed documents and about the rules for annual financial statements preparation:
- For legal entities for which the balance sheet date exceeds the limits of two of the three size criteria set out by the regulations (total assets in value of 3,650,000 lei, net turnover of 7,300,000 lei and the average number of employees equals or exceed 50) the annual financial statements must include: the stock declaration (form code 10), profit and loss account (form code 20), statement of changes in equity, cash flow statement, notes for the annual financial statements.
- This documentation must be accompanied by the form named “Informative Data" (code 30) and by the "Statement of fixed assets" (code 40).
- The abridged annual financial statements must be deposited by legal entities with a balance sheet that does not exceed the limits of two of the size criteria set out above.
- Their financial statements must include: the abridged balance sheet (form code 10), profit and loss account (form code 20) and explanatory notes to the condensed financial statements.
Optionally, they can provide the statement of changes in equity and/or cash flow statement. This will be accompanied by the form " Informative Data" (code 30) and the "Statement of fixed assets" (code 40). If you want assistance for submitting the annual financial statements, we recommend you talk to one of our accountants in Romania.
Balance sheet and form codes
The procedure of simplified annual financial statements is valid for the legal entities that have recorded in the previous financial year a maximum net turnover of 3.000.000 lei. The procedure of depositing simplified annual financial statements is regulated by the Order no. 2.239/2011 issued by the Romanian Minister of Finance. The legal entities eligible for the simplified procedure must deposit a simplified balance sheet (form code 10), profit and loss account (form code 20). These statements must be accompanied by the form "Informative Data" and by the "Statement of fixed assets". The Informative Data for all types of financial statements must present the distribution of profits or the cover the loss, depending on the existing situation. Depending on the type of legal entity there must be also presented an internal or external audit report. The Romanian law sets the deadlines for depositing financial statements as following:
- • within 150 days of the end of the financial year for companies, autonomous administrations, national companies and research and developing institutes;
- • within 120 days of the end of the financial year for non-profit organizations, cooperative societies, branches of foreign persons performing activities in Romania;
- • within 90 days of the end of financial year for legal entities in liquidation situations;
- • within 60 days of the end of the financial year for entities that have never conducted business since the formation.
Small entities and annual financial statements
Small companies (code S1003) with no more than 50 employees need to submit the annual financial statements if the total assets do not surpass 17.5 million lei, or the maximum net turnover of 35 million lei. The annual financial statements for small entities comprise the simplified balance sheet (form code 10), profit and loss account (form code 20), informative data (code 30) and the statement of fixed assets (code 40). In addition, some entities can prepare and submit the administrative report, the audit report and a proposal for distribution of profit or covering of loss accounting.
What are the financial statements requirements for non-profit judicial persons?
The annual financial statements for non-profit judicial persons must comprise the balance sheet, the administrative report, the audit report, minutes of the general meeting approving the annual financial statements, and a written declaration of legal person management accountability for the annual financial statements in agreement with accounting regulations for non-profit legal persons in Romania.
Companies whose securities are admitted to trading on a regulated market
This kind of companies will have to follow different rules regarding the annual financial statements and submit the annual accounting report which is normally to be drawn up by the entities whose securities are admitted to trading on a regulated market and contain forms Code 10, Code 20, Code 30 and Code 40. Also, the annual financial statements must be submitted by entities whose securities are admitted to trading on a regulated market which respects the IFRS accounting regulations, approved by Order 2844/2016 MFP. Preparing and submitting the annual financial statements might seem complicated, especially if you are a foreign entrepreneur in Romania. This is where our team of accountants in Romania can provide in-depth support and assistance.
What happens if you do not submit the annual financial statements?
By the end of May 2019, all companies had to submit the annual financial statements for 2018, according to the rules established by the Minister of Finance. As it is known, the submission of such important documents can also be made on the internet on the official website of the institution. It is important to pay attention to the submission deadline because otherwise, serious penalties are imposed:
- • between 1 and 15 days of delay – penalties from 300 lei to 1.000 lei;
- • between 16 and 30 days of delay – penalties from 1.000 lei to 3.000 lei;
- • for delays of more than 30 days – penalties ranging between 1.500 lei and 4.500 lei.
- • in case of no annual submission, companies can receive fines of approximately 5.000 lei.
According to the Company Act in Romania, in cases of more than 60 days delay, the court of law can dispose the company dissolution.
Are internal audits necessary before submitting the annual financial statements?
Yes, companies are obliged to perform internal audits for the previous financial year before the submission of the annual financial statements. Medium and large companies, plus the national companies and the state enterprises are subject to internal audits before the annual financial statements, according to OUG 75/1999 referring to the financial internal audit for companies in Romania. We remind that the audits in Romania are made in respect with the International Financial Reporting Standards, supervised and authorized by the Financial Auditors Chamber in Romania.
Short facts about companies in Romania
The attraction of foreign investors to the appealing business climate in Romania continues to grow. The following facts and figures can tell more about the business direction in the country:
- • around USD 5.8 billion represented the FDI flow in Romania in 2018;
- • 32% of the total FDI for 2018 sustained the manufacturing sector;
- • the 2019 Doing Business Report ranks Romania 52 out of 190 economies around the world.
- • around 60% of the total foreign capital is found in Bucharest.
We invite you to contact our team of accountants in Romania and solicit complete information about the preparation of the annual financial statements in Romania.