Drafting the financial statements as at 31 December 2023

Noutăți

30 January 2024

The Order 5394/2023 regarding the main aspects related to the preparation and submission of annual financial statements and annual accounting reports of economic operators to the territorial units of the Ministry of Finance was published (OG 11/2024)

The regulations on the preparation and submission of financial statements and annual accounting reports are applied by the following categories of entities:

the entities applying the accounting regulations regarding individual annual financial statements and consolidated annual financial statements, approved by OMFP no. 1,802/2014
the entities applying the IFRS-compliant accounting regulations, applicable to commercial companies whose securities are admitted to trading on a regulated market, approved by OMFP no. 2,844/2016
non-profit legal entities.

The companies whose securities were admitted to trading during the financial year 2023 draw up the individual annual financial statements based on IFRS by restating the information from the accounting organized on the basis of OMFP 1802/2014. Starting with the financial year 2024, the companies whose securities were admitted to trading during the financial year 2023 keep accounting based on the provisions of IFRS.

Content of annual financial statements

The content of annual financial statements depends on the qualification of entities according to the size criteria provided OMFP 1802/2014.

In order to prepare annual financial statements as at the 31^st December 2023, the size qualification is made at the end of the financial year, based on indicators disclosed in annual financial statements related to the previous financial year and based on indicators set by accounting data and the trial balance closed as of end of the current financial year.

Entities which choose a financial year different from the calendar year also establish the respective criteria based on indicators reported in annual financial statements related to the previous financial year and also based on indicators set by accounting data and the trial balance closed as at the end of the entity’s financial year, at a date subsequent to the 1^st of January 2024.

1. Micro-entities, representing entities which at year-end do not exceed at least 2 of the following thresholds:

total assets: RON 1,500,000;
net turnover: RON 3,000,000;
average headcount: 10.

prepare financial statements containing:

Simplified Balance Sheet (code 10);
Income Statement (code 20);
Informative Data form (code 30);
Statement of fixed assets form (code 40).
Micro-entities do not have the obligation to prepare disclosure notes, their preparation being optional, but they must present a minimum set of information regarding accounting policies, financial commitments, guarantees, contingent assets and liabilities, as well as information on advances and credits granted to directors or commitments made on their behalf.

2. Small entities, representing entities which are not micro-entities and which at year-end, do not exceed at least 2 of the following thresholds:

total assets: RON 17,500,000;
net turnover: RON 35,000,000;
average headcount: 50

prepare annual financial statements containing:

Simplified Balance Sheet (code 10);
Income Statement (code 20);
Informative Data form (code 30);
Statement of fixed assets form (code 40);
Disclosure notes;
Optionally, the statement of changes in owner’s equity and cash flow statement may be prepared.

3. Medium and large entities, representing entities which at year-end, exceed at least 2 of the following thresholds:

total assets: RON 17,500,000;
net turnover: RON 35,000,000;
average headcount: 50

as well as public interest entities, prepare annual financial statements containing:

Balance Sheet (code 10);
Income Statement (code 20);
Informative Data form (code 30);
Statement of fixed assets form (code 40);
Statement of changes in owner’s equity;
Cash flow statement;
Disclosure notes.

Newly set-up entities may prepare for the first reporting financial year abbreviated annual financial statements or five-component annual financial statements, as well as annual financial statements as those applicable to micro-entities.

In situations where the legal entity has its headquarters abroad but carries out economic activity in Romania through several permanent establishments, annual financial statements are prepared by the establishment assigned to fulfil fiscal obligations. Annual financial statements should reflect the activity of all permanent establishments. In this regard, the assigned permanent establishment proceeds to consolidate information related to activity carried out by each permanent establishment in Romania.

Non-profit legal entities which do not carry out economic activities prepare annual financial statements as at the 31st of December containing a simplified balance sheet and abbreviated income statement, by using the assistance programme developed by the Ministry of Public Finance.

Non-profit legal entities, carrying out economic activities prepare annual financial statements as at the 31^st of December containing a balance sheet and income statement, by using the assistance programme by the Ministry of Public Finance (MPF). For these economic activities carried out by non-profit legal entities, according to law, Accounting Regulations for non-profit legal entities approved by Order of the Minister of Economy and Finance 1969/2007 is completed, depending on the case, with Accounting Regulations approved by the Minister of Public Finance 1802/2014.

Audit of annual financial statements

Annual financial statements are subject to audit if at least two of the following three criteria are exceeded, for two consecutive financial years:

total assets: RON 16,000,000;
net turnover: RON 32,000,000;
average headcount: 50.

Financial statements of public interest entities are also subject to audit.

Entities opting for a financial year different from the calendar year evaluate the criteria based on indicators reported in annual financial statements related to the previous financial year and based on indicators reported in accounting data and the trial balance closed at the end of the entity’s financial year, at a date subsequent to the 1^st of January 2024.

Audit obligations cease only if two of the three criteria are not exceeded for two consecutive financial years.

Submission deadline

Annual financial statements and annual simplified financial statements are submitted to territorial units of the Ministry of Public Finance within 150 days from the date when the financial year ends. Thus, for entities which have the same financial year as the calendar year, the submission deadline is the 29^th of May 2024;
Public institutions, associations and other for-profit and non-profit organizations submit their annual financial statements within 120 days from close of the financial year-end, meaning the 29^th of April 2024;
Sub-units in Romania, belonging to legal entities having their headquarters or domicile abroad, except those opened in Romania by companies which are resident in European Economic Area (EEA) States, submit their annual financial statements as of the 31^st of December to territorial units of the Ministry of Public Finance within 150 days from the close of the financial year. The same deadline is applied for submission of annual financial statements prepared for permanent establishments. Assigned permanent establishments submit their annual financial statements to the territorial unit where they are registered.
Entities which do not carry out activity from inception through the end of the reporting financial year do not prepare annual financial statements. Instead, they will submit a statement under own responsibility/affidavit signed by the person having the obligation to manage the entity within 60 days from the close of financial year (the 29^th of February 2024). The statement is submitted electronically;
Non-profit organizations submit financial statements within 120 days from the close of its financial year, or by the 29^th of April 2024;

Entities opting for a financial year different from the calendar year have the obligation to submit a notification to elect the option for a financial year different from the calendar year in electronic/digital format to territorial units of the Ministry of Public Finance at least 30 calendar days prior to the beginning of the entity’s financial year or within 30 calendar days from set-up date of newly established entities opting for a different financial year than calendar year at inception.

Submission

Annual financial statements as at the 31st of December are submitted:

in paper and electronic format at register offices of the territorial unit of Minister of Public Finance (MFP) or at post offices, as letters with declared value;

only in electronic format at www.e-guvernare.ro, having an extended electronic signature attached.

The electronic format of annual financial statements, consisting of a .pdf file with an .xml file with an attached .zip file containing annual financial statements and documents requested by law, as they are prepared by the reporting entities are scanned in readable black and white format, with resolution allowing a maximum size of 9.5 MB for the .pdf file.

The statement of inactivity, as well as the notification to fiscal authorities regarding the option for a different financial year than the calendar year, is also submitted in paper and electronic format, or only in electronic format having an extended electronic signature.

Signature of annual financial statements

All annual financial statements closed as at the 31^st of December should be signed by individuals who are entitled by law and by the Director or individual responsible for management of the entity.

First, annual financial statements should be signed by individuals preparing them. The signature should be by the person organising and conducting accounting activities for the company for which the forms are submitted, or by an authorized provider of accounting services. Specifically, the person signing for preparation of financial statements may be:

Economic Director or Chief Accountant;
Another empowered person;
Authorized individuals or legal entities, CECCAR members.

Regarding empowered persons, not just anyone within the company may sign financial statements. That is, the concerned person should have higher education in the field of economics and be able to stand in, based on a notarized power of attorney, for Economic Director or Chief Accountant

Annual financial statements are also signed by the Director or by the person responsible for management of the entity.

Annual financial statements should be accompanied by a management report, audit report or audit committee report (“cenzori”), and, depending on the case, by the proposal for profit allocation or recovery of accounting loss.

Annual financial statements should be accompanied by a written statement of the Director, the head of the public entity or the person who is responsible for management of the respective unit, stating that he/she is responsible for preparation of annual financial statements and confirms that:

Accounting policies used to prepare annual financial statements are in accordance with applicable accounting regulations;
Annual financial statements present a fair view of the financial position, financial performance as well as other information regarding the activity;
The legal entity carries out its activity as a going concern.

Other observations

Dividends distributed in advance during the 2023 financial year

Dividends distributed in advance throughout 2023 based on quarterly interim financial statements should be analysed in relation to the final distributable profit for the year 2023. If the anticipated distributions exceed the annual distributable amount, the associates/shareholders should repay the surplus distributed in advance.

Non-financial statement for large companies

Private companies having an average of more than 500 employees during the financial year should submit along with financial statements related to 2023 a non-financial reporting on environmental, social and personnel issues, among others. This obligation is provided by OMPF 3456/2018.

Annual accounting report as of 31^st of December

Who should submit accounting reports as of the 31^st of December?

entities which opted for a different financial year than the calendar year, according to art. 27 para. (3) of Accounting Law 82/1991, in any organizational and ownership form;
legal entities under liquidation, according to law;
sub-units opened in Romania by companies which are resident in EEA States;
legal entities which are required to apply Accounting Regulations in conformity with IFRS should submit annual accounting reports as of 31^st of December 2023, in addition to annual financial statements including all components provided by IFRS.

Accounting reports are different from annual financial statements concluded on the date selected.

Annual accounting reports as of 31^st of December contain the following forms:

Statement of Financial Position (code 10);
Income statement (code 20);
Informative data form (code 30);
Statement of fixed assets (code 40).

These reports are prepared based on the summary trial balance closed as at the 31^st of December.

Electronic format of annual accounting reports as at the 31^st of December, including the necessary forms and online verification application, with instructions for use, is obtained using guidance on its preparation made available by MPF (Ministry of Public Finance).

This application is distinct from that used for preparation of annual financial statements and for simplified annual financial statements.

Signature

The annual accounting report as at the 31^st of December is signed by individuals who are entitled by law to sign annual financial statements and by the Director or individual responsible for management of the entity.

Deadlines for preparation and submission of annual accounting reports

Entities submit accounting reports to territorial units of MPF annual as at the 31^st of December, in paper and electronic format or only in electronic format at www.e-guvernare.ro, having an extended electronic signature attached. The electronic format of annual accounting reports as at the 31^st of December, obtained using guidance on its preparation, consists of a .pdf file with an .xml file attached.

Submission deadline of annual accounting reports as of 31^st of December is:

90 days from the end of the calendar year in the case of legal entities under liquidation (the 30^th of March 2024);
150 calendar days from the end of the calendar year for other entities (the 29^th of May 2024).

Entities opting for a financial year different from the calendar year and which did not carry out activity from set-up date through the 31^st of December, as well as those under liquidation, according to law, do not prepare annual accounting reports as at the 31^st of December. In this regard, they should submit a statement under own responsibility/affidavit signed by the person responsible for management of the entity to territorial units of MPF.

Statements for entities which did not carry out activity from set-up date through reporting date are submitted to territorial units of MPF within 60 calendar days from the end of the calendar year.

Article written by Valentin Alangiu, Accounting & Tax Partner – Nowium Tax&Finance

Valentin ALANGIU

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