The Interrelations between Accountancy and Finance from the Stakeholders’ Point of View at the First Edition of the National Conference on Accounting and Taxation

It is well-known that professional accountants play an important role in the economy, their involvement in the smooth functioning of the tax systems becoming more and more active, a fact acknowledged by the activities included in the amendment introduced last year to Emergency Ordinance no. 65/1994 by Law no. 162/2017.

Additionally, as tax intermediaries – as stipulated by Council Directive 2011/16/ EU  (as amended by Council Directive 2018/822/ EU  of 25 May 2018 – published in the Official Journal of the EU on 5 June 2018) as regards the mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements, applicable to tax advisers, accountants, banks and lawyers who develop and promote tax planning schemes for their clients, ratified by the EU Member States on 13 March  2018 –, it will be mandatory for professional accountants creating complex cross-border financial systems that could contribute to tax evasion to declare these structures to their tax authorities.

In this context, as the interrelation between accounting, taxation and the banking sector requires an integrated approach, which is essential for the smooth functioning of the economy, the Body of Expert and Licensed Accountants of Romania (CECCAR) organized the first edition of the National Conference on Accounting and Taxation, in cooperation with the Romanian Banking Institute, on Thursday, 7 June 2018.

The conference, structured in four panels which included presentations and debates on current and future topics, was held at the IBR headquarters and brought together practitioners and representatives of financial, banking and  fiscal institutions.

The event was opened by the CECCAR president, Prof. Robert Aurelian Șova, PhD, who mentioned that this is the first edition of a conference which, together with the National Conference on Judicial and Extrajudicial Accounting Expertise that took place on 28 November 2017 and the National Conference on Controlling and Risk Management that took place on 7 March 2018, is part of a series of initiatives that CECCAR intends to undertake on a annual basis, in order to transpose the professional accountants’ activity  in debates expressing all stakeholders’ points of view – whether practitioners in accounting and taxation or representatives of the business environment,  regulators and oversight institutions. Furthermore, the President of CECCAR emphasized the importance of debating these issues as part of the events and identifying challenges, opportunities and solutions to transform challenges in opportunities, creating, at the same time, a favorable environment between all parties involved, with positive results for the development the national economy.

Emilia Frunză, International Certifications and Partnerships Department – Romanian Banking Institute (the co-organizer of this event), Mihai Busuioc, President of the Romanian Court of Accounts and George Constantin Păunescu, President of the General Union of Romanian Industrialists, conveyed their messages, emphasizing the good collaboration with CECCAR, as well as the importance of the skills and experience professional accountants  bring to the economic environment.

The first panel was moderated by Ioana Bădescu, CECCAR Superior Council Member, who, together with Alexandra Lazăr, Head of Legislation and Accounting Regulations in the Ministry of Public Finance and Lecturer Marcel Vulpoi, PhD – the Bucharest University of Economic Studies, discussed the financial reporting framework at national and European level, highlighting its relevance in the current business context.  Furthermore, the first panel speakers referred to a public consultation published by the European Commission, which raises a number of questions in order to improve the financial reporting framework to better address the users’ needs – Fitness check on the EU framework for public reporting by companies, provided by CECCAR to its members translated in Romanian, on

Moderated by Prof. Robert Aurelian Șova, PhD, the second panel’s discussions focused on the modification of Council Directive 2011/16/EU, published the Official Journal of the EU on 5 June 2018, the topic chosen for this part of the conference being Challenges and Opportunities for Expert Accountants as Tax Intermediaries in the Context of the Modification of Directive 2011/16/EU. The main objective of this directive is to strengthen fiscal transparency and to fight against tax avoidance in the EU Member States. The new reporting framework will enter into force on 1 July 2020 and  require that tax intermediaries who provide complex financial cross-border schemes which can lead to tax avoidance report these structures to the local authorities. The debates also referred to the important role played by professional accountants in the field of taxation, a role emphasized by the International Federation of Accountants (IFAC) in an article published on their website by Russell Guthrie, IFAC’s Executive Director for External Affairs and Chief Financial Officer. The article referred to the results of a 2007 report by the Forum on Tax Administration (formed by practitioners from 45 countries) which recognized the role played by intermediaries such as accountants in ensuring that tax systems function properly. The Forum on Tax Administration has a consolidated position and consists of Commissioners coming from 50 OECD countries and non-OECD countries, including the members of the G20. Its  purpose is to influence global trends in order to improve the tax system on a global level. Accountancy Europe also published an article in 2015 named The accountancy profession and taxation: doing the right thing which offers a general perspective regarding the role of professional accountants in taxation. The article emphasizes the ideal position the accountant is placed in to interact with taxpayers, tax authorities and regulators in a continually evolving fiscal environment. Accountancy Europe has continued the awareness-raising campaign concerning the important role of the professional accountant in the well-functioning of the tax system by publishing  a Q&A document in 2017, entitled The role of professional accountants in tax, in the context of the European initiatives and public agenda in this field.

The panel’s theme was discussed by the moderator with the president of the CECCAR Bucharest Branch, Aurel Andrei – who approached the subject from the forensic expert accountant’s point of view, Marius Viorel Nitu – Head of Service, General Direction of Tax Information, ANAF – representing the institution collecting the financial data from taxpayers, and lecturer Adriana Popa PhD – Bucharest University of Economic Studies – taxation expert.

President Robert Aurelian Șova, PhD, announced that, starting this month, CECCAR has become a member of the European Tax Adviser Federation (ETAF), an European organization reuniting more than 230,000 tax professionals coming from France, Germany, Italy and Belgium, whose main purpose is to represent the profession at European level, being a trusted partner in the debates of European policy-makers in order to promote good legislation in the field, fight against abuse and inequalities, and improve transparency.

The conference continued by addressing a third subject – The challenges of accountancy and taxation in the public sector, with  Laurențiu Dodocioiu, Head of Office in the Ministry of Public Finance, Alexandru Costache, representing the Romanian Court of Accounts, lecturer Liviu Matac, PhD, Bucharest University of Economic Studies, and President Robert Aurelian Șova, PhD.

“Accounting for the public sector is continually evolving at the European and international level, but there still are many areas in which stakeholders haven’t reached an agreement yet and where professional accountants need to engage more, both from the perspective of building an accounting system and from the perspective of their involvement in the accounting activities of the public sector”, said the President of CECCAR, at the same time mentioning that “the accounting system in the public sector did not keep up with the private sector. Internationally, steps have been taken to regulate this area. International standards for the public sector tend to resemble financial reporting standards for the private sector– but there are pros and cons. The openness of the Ministry of Finance and the Romanian Court of Accounts will help create a highly efficient system.”

The ForExeBug system, developed under the coordination of Tiberiu Valentin Mavrodin Secretary of State in the Ministry of Public Finance, was discussed in connection with the relationship between accounting and taxation in the public sector. The high-performance IT service for financial reporting by public institutions has been implemented in Romania, one of the first countries in the EU to take such a measure, as a result of the European Commission’s requirements. Our country became thus an example of good practices,  allowing the Ministry of Public Finance to access to the balance sheets of all public institutions and, at the same time, helping managerial decision-making. Laurenţiu Dodocioiu, representative of the Ministry of Public Finance, addressed the audience on this topic, being directly involved in the implementation of this integrated mechanism for making all payments of government institutions, with the exception of credit institutions for which a form for reporting and cross-checking with the accounting records exists. According to the representative of the Ministry of Public Finance, from 1 of January 2019, the national reporting system will be the sole source of financial accounting information in the public sector, while in relation to the online Treasury, a deadline of one year – one year and a half is estimated to finalize the project.

Concerning the ForExeBug system’s efficacy, Alexandru Costache, from the Romanian Court of Accounts, addressed the issue from the point of view of audit engagements and the optimization of these activities through the cooperation with the Ministry of Public Finance, bringing into discussion the collaboration protocol signed between the two institutions as well.

Regarding the difficulties that a professional accountant has to overcome in order to adapt to working for the public sector, taking into account all the previously mentioned instruments, lecturer Liviu Matac, PhD, noted that the implementation of the new IT system makes accounting for sector public sector, a less noticed market by CECCAR members, more accessible for professional accountants. At the same time, he mentioned that using the IT system has accelerated the submission of financial reports, thus providing more time for managerial analyses.

The last part of the National Conference on Accounting and Taxation, moderated by lecturer Marcel Vulpoi, PhD, brought into discussion accounting challenges in the banking sector. Bogdan Tudose, vice-president of the Accounting Commission of the Romanian Association of Banks, talked about the challenges faced by the banking system in the past years and about IFRS 16 – the new leasing standard (which becomes effective on 1 January  2019), including a prediction of the standard’s application for banking institutions, and mentioned that the copy-paste method will likely be the most appropriate manner of  implementing the directive in the national legislation.

Elena Rusu, head of BCR’s Regulatory and Tax Department, presented the challenges in bank accounting related to the application of IFRS 9, an international standard that has been in force since 1 January 2018 in all EU countries and which has a significant impact on risk management and on the banking business model.

Another important topic of the conference was approached by Valerian Ionescu, supervisor of the Investment Products Management Department, BCR – the MiFID II legislation package, a directive whose main objectives are to increase market transparency, enhance investors’ protection  and improve the conditions of competition among market participants.

Both IFRS 9 and MiFID II involve significant changes for banking institutions, particularly regarding ICT systems and applications, the impact in this area being significant mainly from the financial point of view.

At the end of the event, CECCAR organized a lottery in which three participants received a free license for IFRS® 2017, the latest edition containing the consolidated text of the authoritive pronouncements published by the International Accounting Standards Board (IASB®).

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