The “train-track ordinance” ensured that financial and accounting obligations were not overlooked, resulting in significant increases in fines

According to consultants from PwC Romania, fines for companies that do not meet their financial-accounting obligations have seen a significant increase, in some cases even doubling the penalties. The implementation was made through amendments to Law no. 82/1991 (the Accounting Law) in the “Trainlet Ordinance” (MO no. 115/2023), as reported by Agerpres. This Ordinance includes all the changes that will come into force for the financial statements of the 2023 fiscal year.

According to an analysis sent to AGERPRES on Tuesday by Miruna Dragoman, Senior Manager of PwC Romania, the most significant changes relate to the requirements in the accounting policy manual and the completion of the inventory. The authorities aim to improve voluntary compliance while at the same time penalising companies that fail to meet their legal obligations. It is worth noting that the detailed fines set out in Article 42 of the Accounting Law have remained largely unchanged since 2011, and some have even remained the same since 2008.

Law No 296/2023 took a first step towards increasing the penalties imposed on companies by abolishing the provision that allowed economic entities sanctioned under the Accounting Law to pay half of the minimum fine within 15 days of receiving or communicating the penalty.

A company that held assets and liabilities or failed to record them in its accounts could be fined between 1,000 and 10,000 lei before the Ordinance was updated.  The same specialist said that fines of between 2,000 and 20,000 lei could be applied from the end of 2023, almost twice the previous level.

The quoted source suggests that the existence of accounting policies and procedures manuals is another factor that has changed. A company that does not comply with Public Finance Ministry regulations can face fines of between 300 and 4,000 lei, whereas now it can receive fines of between 2,000 and 10,000 lei.

Despite the existence of accounting policies and procedures, the approval of Accounting Regulations for individual annual financial statements and consolidated annual reports requires approval by the Accounting Law. According to Miruna Dragoman, directors are responsible for signing a declaration confirming compliance with the accounting regulations when preparing the annual financial statements.

Upon establishment, a company must prepare its accounting policy manual, detailing the policies, accounting procedures that it will apply in its financial-accounting operations taking into account the specifics of the business. This manual must be updated periodically to reflect legislative changes or changes in accounting policies applied at company level.

Interest in the accounting policy manual is low, but the same cannot be said of the inventory process. According to the law, an inventory of assets must be carried out at least once every financial year, as well as in the event of a merger, division, transformation or liquidation of a company.

Specialists at PwC Romania argue that the annual inventory covers all assets and is not limited to fixed assets or stocks. The inventory provisions can be found in OMFP no. 1802/2014 and OMFP no. 2861/2009.

As of 2023, if a company fails to carry out an inventory of assets at least once a year, it may be fined between RON 3,000 and RON 20,000, compared to previous fines of RON 400 to RON 5,000. PwC Romania analysis says: “It is important to mention that in practice we have observed that the documents prepared for the inventory of assets are also requested during tax inspections”.

A significant change in the regulations concerns sanctions or fines applied for non-compliance. The fines are amended to vary from 2,000 lei to 20,000 lei, with the effective amount increasing from 300 to 4,000 lei. The Accounting Act specifies that the journal register, inventory register (if any), accounting register and trial balance are the required accounting registers.

In addition, in 2023, according to Law No 36/2023, certain retention periods were reduced from 10 years to 5 years. Therefore, the accounting ledger, the supporting documents underlying the accounting records and the databases from the use of the accounting system will be kept for a period of 5 years. However, we need to be careful about the method of calculating this period of time. Financial statements and accounting reports will be kept for ten years. The fine for failure to submit annual financial statements and accounting reports on time remains unchanged. However, directors should pay more attention to how to comply with the accounting laws, because after these legal changes, a company with a fiscal year different from the calendar year is obliged to audit its financial statements but does not have to prepare financial statements. Consolidated financial statements, non-compliance with the legal provisions may lead to a fine of up to 60,000 lei (the amount calculated on the minimum penalty), compared to the previous amount of up to 20,000 lei (taking into account the ease of paying half of the fine within 15 days)”, the experts of the tax consultancy company added.