Order no. 4291/2022 regulating certain accounting matters & Order no. 4268/2022 on the main aspects of the preparation and submission of annual financial statements

The main amendments and regulations made by Order No 4291/2022 to the Accounting Regulations on individual annual financial statements and consolidated annual financial statements, approved by Order of the Minister of Public Finance No 1.802/2014, are as follows:

• Clarifications are made as to when an entity must stop capitalising debt costs as part of the cost of a long-lived asset, i.e. during extended periods when it is not actually working on the long-lived asset;
• Provisions are introduced on the recognition of amounts received in advance from customers. More specifically, amounts received before the entity transfers to the customer the goods/services contracted for under the contracts between the parties are recorded as a receivable from the customer, via the account "419 - Customers - creditors"), and the liability is derecognised when the goods/services are transferred, at which time revenue is also recognised.  Also, in situations where entities receive non-refundable advances from customers (e.g. activation fees from telecommunication contracts, set-up fees from certain service contracts, upfront fees from certain supply contracts), entities must determine whether the advance received relates to the provision of a service in a future period, in which case the advance should be recorded in account 472 "Deferred income". Otherwise, i.e. when the advance does not relate to future services, the amount is recognised as income for the period;
• The accounting treatment applicable in the situation where entities receive dividends distributed during the financial year is established, i.e. (461 "Sundry debtors"/separate balance sheet = 467 "Liabilities related to interim dividend distributions"). The amounts are settled on the dividends due on the basis of the financial statements approved by law. (461 "Sundry debtors" = 761 "Income from financial fixed assets");
• Provisions on revenue recognition are introduced when entities act on their own behalf or on behalf of third parties by exemplifying some indicators (the entity is primarily responsible for the completion of the project, the entity has an inventory risk, the entity has the discretion to set the price for the specified good or service), without being limiting;
• New provisions on the timing of revenue recognition by entities that provide customers with the right to use its intellectual property through licensing agreements are established and detailed;
• New accounts are included in the general chart of accounts as follows: 467 "Liabilities related to interim dividend distributions", 6053 "Expenses related to natural gas consumption", 6058 "Expenses related to other utilities", 694 "Income tax expenses resulting from settlements within the tax group in the area of income tax" and 794 "Income tax revenues resulting from settlements within the tax group in the area of income tax", and others are renamed as follows: Group 60: 'Expenditure on stocks and other consumption', Group 79: 'Income from corporation tax', and Account 605: 'Expenditure on utilities'.  It also adds and details the function of the accounts for the newly introduced accounts.

These provisions apply from the financial statements for the financial year 2022. Entities that choose a financial year other than a calendar year apply the regulations from the first annual financial statements closed on a date after 1 January 2023.

The main provisions introduced by Order No 4268/2022, are as follows:

• The form and rules for the preparation and submission of annual financial statements and annual accounting reports of economic operators are approved;    
• The procedure for correcting errors contained in the annual financial statements and annual accounting reports submitted by economic operators and non-profit legal entities shall also apply to the consolidated annual financial statements submitted by economic operators to the territorial units of the Ministry of Finance;
• In case entities have the RON (Legal Entity Identifier) code - "legal entity identifier" - this shall be completed in the financial statements, in addition to the identification data (name of the entity, address, telephone number and trade register number), as well as data on the correct form of ownership and unique registration code.