Chamber of Financial Auditors of Romania
Member | Established: 1999 | Member since 2008
The CFAR was established by Government Ordinance No. 75 of 1999 and is comprised only of auditors – physical and legal persons. CFAR members are authorized to perform other services than statutory audit unless they are issued a license by the ASPAAS (the audit oversight body).
CFAR is authorized by Ordinance No. 75 of 1999 to carry out certain responsibilities: (i) maintain registries of its members - auditors and audit firms; (ii) continuous professional development for its members in all relevant fields, except for statutory audit; (iii) investigative and disciplinary activities, related to its members; and (iv) conduct QA reviews for engagements other than statutory audit. CFAR has been delegated the following tasks by ASPAAS: (i) organization of the exam to access practical training; (ii) organization of the professional competence exam at the end of the practical training; and (iii) organization of the CPD program for Romanian financial auditors.
Both CFAR and CECCAR are Members of IFAC as well as Accountancy Europe. CFAR is also a member of EFAA and the Common Content Project.
Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
SMO 1: Quality Assurance
As of July 2018, the Chamber of Financial Auditors (CFAR) is performing QA reviews for non-statutory audits and other types of engagements, such as internal audit, agreed-upon procedures, or other assurance engagements while the Statutory Audit Public Oversight Authority (ASPAAS) has assumed authority over all QA reviews for statutory audits.
The CFAR reports that its QA system — implemented through its Department for Monitoring, Control, Professional Competence and Research (DMCPC) — is in line with SMO 1 requirements. It has continued the adoption of standards related to review and other assurance services and uses its best endeavors to ensure that the QA review system is in line with the requirements of SMO 1 and EU Audit Directives.
To support its members, CFAR disseminates norms and guidance on quality control and inspections through its website and magazine publications. The DMCPC publishes an annual report of its findings. It has updated the criteria for selecting and reviewing members that obtain low results and developed trainings to address areas of QA reviews where auditors commonly have difficulties.
CFAR also collaborates with the ASPAAS via its representatives in the oversight body to ensure a consistent exchange of information on the operations and findings of the QA review system for statutory audits performed by CFAR members. Further, ISQM 1 and 2 are part of the 2021 CPD program for Romanian financial auditors, organized by CAFR under ASPAAS’ oversight.
CFAR is encouraged to continue to monitor and support the implementation of quality management standards among members before it becomes effective as of December 15, 2022, and, to the best of its abilities, continue to engage with the ASAPAAS in this regard to ensure all quality assurance procedures remain aligned with SMO 1. Resources on the quality management standards are available on the IAASB website.
SMO 2: International Education Standards
In Romania, the initial professional development (IPD) and continuing professional development (CPD) requirements for auditors are set in Government Emergency Ordinance (GEO) No. 90 of 2008 as amended by Law No. 162 of 2017 and implemented by the Statutory Audit Public Oversight Authority (ASPAAS) and the Chamber of Financial Auditors of Romania (CFAR).
As of 2020, ASPAAS has delegated authority to CFAR to organize the initial and final competency examinations and the CPD for auditors, which it states align with IES 6 - 8. CFAR indicates that its examinations include a theoretical and practical component to assess competencies. It has an annual CPD program and members must complete 40 hours per year. CFAR has created a centralized system for recording members’ compliance with CPD obligations. The institute reports that the IES requirements are reviewed, translated, and addressed on an ongoing basis by CFAR’s Department for Admission, Continuous Education and Trainees. Further, CFAR indicates that it is a member of the Common Content Project – undergoing a review and assessment that states that its educational programming meets international benchmarks.
The CFAR outlines in its SMO Action Plan how key provisions of IES 1 – 8 are addressed by the ASPAAS and/or CFAR for auditors and that educational requirements incorporate the latest revisions to the IESs.
The IES Checklist developed by IFAC may be useful as well as the IFAC Accountancy Education E-Tool to review the current version of IESs and share these requirements with key stakeholders like the ASPAAS.
SMO 3: International Standards on Auditing
The Law No. 162 of 2017 on Statutory Audit of Annual Financial Statements and Annual Consolidated Financial Statements which translates the EU Audit Directive, stipulates that all statutory audits are to be carried out in compliance with ISA as issued by the IAASB as translated by the Statutory Audit Public Oversight Authority (ASPAAS). As of 2021, CFAR and CECCAR reports that 2018 ISA has been translated into Romanian and is being applied.
Previously, the CFAR was delegated authority to translate the ISA and had been translating the standards in line with IFAC’s Translation Policy since 2006. Now its efforts are concentrated on supporting members’ implementation of the standards.
CFAR indicates its Department for Admission, Continuous Education and Trainees updates the training themes and programs according to the provisions of the IAASB. The annual training programs focus on the latest topics in the field of international standards. For example, the program for 2021 includes training on new quality management standards and key audit matters.
CFAR also notes it has developed an audit app, primarily to support its SMP members, that includes templates members can adapt to their files for their work which supports application of ISA. It has also issued guides on internal audits and translated IFAC’s Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities.
CFAR also indicates that it participates in events to exchange experiences and information with other national, regional, and global bodies regarding the implementation of ISA.
CFAR seems to maintain timely implementation support process to fulfill obligations under SMO 3. The IAASB has issued an exposure draft of the proposed separate standard for audits of Less Complex Entities. CFAR is encouraged to participate in the public consultation process for this landmark new draft standard considering the type of services its members provide.
SMO 4: Code of Ethics for Professional Accountants
Under the Law No. 162 of 2017 on Statutory Audit of Annual Financial Statements and Annual Consolidated Financial Statements, CFAR is responsible for establishing ethical requirements for auditors under the oversight and delegation of the Statutory Audit Public Oversight Authority (ASPAAS). In 2019, CECCAR — the PAO for expert and licensed accountants — and ASPAAS translated and made publicly available the 2018 edition of the International Code of Ethics for Professional Accountants issued by the IESBA for application by all professional accountants in the jurisdiction. CFAR indicates it strives to meet continuously with the ASPAAS regarding any new and revised requirements and the need for timely translation and adoption.
CFAR supports the implementation of the IESBA Code of Ethics on an ongoing basis by informing and educating members on ethical requirements through its website, newsletters, and continuing professional development programs. It also makes clear the consequences of any misconduct. Additionally, CFAR’s Department for Admission, Continuous Education and Trainees, reviews changes in IESBA pronouncements and updates the curricula for professional education and training programs. For example, the CPD program for 2021 includes training on revised independence standards.
CFAR also organizes technical seminars on an ongoing basis on the IESBA Code of Ethics in cooperation with the Association of Chartered Certified Accountants (ACCA) and large audit firms.
There upcoming revisions to the Code in the 2020 Handbook – also available in the IESBA eCode — including revisions to Part 4B of the Code?to reflect terms and concepts used in the IAASB's International Standard on Assurance Engagements (ISAE) 3000 (Revised), which are effective June 2021 and revisions to promote the role and mindset expected of all professional accountants which are effective in December 2021. These revisions are available in Romanian and CFAR is encouraged to continue its efforts in this area to ensure that its members can implement the revisions once effective.
CFAR could also consider participating in the international standard-setting process by providing comments on exposure drafts issued by the IESBA to provide its perspective.
SMO 5: International Public Sector Accounting Standards
The Ministry of Public Finances (MFP) is responsible for the adoption of public sector accounting standards in Romania. MFP Order No. 1917/2005, with its subsequent amendments and supplements, requires the application of accrual-basis accounting principles. Notably, the regulation includes the adoption of certain accrual-basis IPSAS provisions of certain items such as tangible fixed assets, stocks, provisions, expenses, and revenues. According to the CIPFA/IFAC 2020 International Public Sector Financial Accountability Index, partial accrual national standards are applied currently and full accrual-basis standards are expected to be applied by 2025.
CFAR has focused its efforts on advocating for the convergence with accrual based IPSAS to the relevant stakeholders, including the Ministry of Public Finance. CFAR states that it is active in promoting the adoption of IPSAS by participating in national and international events that address the topic of public sector accounting standards.
CFAR also raises awareness and attempts to increase the knowledge of its members about IPSAS through the inclusion of information on IPSAS in its magazine.
CFAR is using its best endeavors to fulfill its obligations under SMO 5, and it is encouraged to continue its advocacy and support toward accrual-basis IPSAS. Adoption and implementation of accrual IPSAS as issued by the IPSASB would ensure application of global best practice. CFAR may find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for any advocacy and/or educational activities it offers.
SMO 6: Investigation and Discipline
In accordance with the GEO No. 75 of 1999 and GEO No. 90 of 2008, CFAR is responsible for adopting I&D procedures for activities, except for statutory audits, performed by its members. These activities include assurance engagements, the agreed-upon procedures, among others. The Statutory Audit Public Oversight Authority (ASPAAS) in accordance with Law No. 162 of 2017 and the Government Emergency Ordinance (GEO) No. 23 of 2012 carries out an investigative and disciplinary system for statutory auditors and audit firms.
CFAR reports that it has an operational I&D system in place to oversee the performance of its members’ compliance with relevant standards, ethical requirements, and CPD. Its Disciplinary Commission is charged with resolving any violations with information reported from other departments related to inspection reviews and CPD fulfillment. In 2020, the commission settled three cases and is addressing three in 2021.
CFAR indicates that its Council has made I&D a priority focus since 2015. Part of their strategic plan includes establishing processes to receive requests for investigations, prepare and present an annual report to the CFAR Council on I&D cases, and publish case studies to encourage students and members to study and review them. Disciplinary decisions are now published in the CFAR’s Annual Report and its regulations regarding the Disciplinary Commission are also publicly available.
CFAR states that it communicates changes to the jurisdiction’s I&D framework, based on ASPAAS’s I&D mechanisms, to its members via articles in its magazine, seminars, and conducting multi-stakeholder roundtable discussions.
CFAR has conducted a self-assessment of its I&D system against the requirements of SMO 6. CFAR found that areas requiring improvement include: the composition of its Disciplinary Committee (currently comprised of only auditors) and procedures for liaising with outside bodies.
Public confidence in enforcement mechanisms for all professional accountants is essential. CFAR has progressed with some of its stated strategic objectives related to I&D but there seem to continue to be components of SMO 6 global best practices that are not incorporated since 2017. CFAR is encouraged to explain its plans (along with timeframes) for addressing these within its Action Plan.
SMO 7: International Financial Reporting Standards
Law 82/1991, also known as the Accounting Law, establishes the Ministry of Public Finances (MFP) as the accounting standard-setter in Romania and is responsible for transposing EU regulations that require the application of IFRS as endorsed by the European Commission into national law. Listed companies must apply EU-endorsed IFRS. The MFP has also permitted companies that do not trade in the regulated market to choose between EU-endorsed IFRS for consolidated financial statements or Romanian Accounting Standards (RAS).
The CFAR states that it plays an active role in supporting the MFP and supporting the implementation of both EU-endorsed IFRS and RAS. CFAR is a member of the Council for Accounting and Financial Reporting (CCRF) since its establishment by Government Decision No. 401 of 2005, which is the entity that advises the MFP on the development of the RAS.
Further, CFAR focuses on strengthening the knowledge and technical competency of its members in the application of IFRS by offering trainings and standard-related courses in its continuing professional development program. CFAR also informs its members about new, proposed, and revised IFRS, and publishes articles and news about the implementation and adoption of IFRS, as well as international trends in the CFAR magazine.
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