DETECTING AND REPORTING THE FRAUDS AND ERRORS BY THE AUDITOR

Responsibility for preventing and detecting fraud rest with management entities.Although the auditor is not and cannot be held responsible for preventing fraud and errors, in yourwork, he can have a positive role in preventing fraud and errors by deterring their occurrence. Theauditor should plan and perform the audit with an attitude of professional skepticism, recognizingthat condition or events may be found that indicate that fraud or error may exist.Based on the audit risk assessment, auditor should develop programs to audit procedures by whichto obtain reasonable assurance that the financial statements in their entirety, all significant errorsand fraud have been identified. It is expected that the auditor to implement procedures that willlead to the discovery of errors or fraud without significant impact on the financial statements cannot be held responsible for undetected such irregularities.The auditor should communicate with the management of his client. He should ask the managementinformation concerning any significant fraud or error has been detected in order to detect keyproblems that could lead to certain activities, the implementation of audit procedures more thanusual However the auditor faces the risk inevitable that some significant errors to be detected, evenif the audit is planned and done properly.fraud, error, tests, audit

OFFSETTING – A METHOD OF SETTLING OBLIGATIONS OF LEGAL ENTITIES

Offsetting is a specific method of settling mutual obligations, where the same persons are at the same time creditor and debtor one to another, and by means of which obligations are settled up to the smallest value. Offsetting of mutual obligations is a common way of settling debts, especially in the economic crisis marked by lack of liquidity, among others. There are different offsetting procedures provided by Romanian legislation, according to residence, size of offset amount and state’s involvement in the transaction. The analysis of each offsetting situations encountered in the practice of Romanian legal entities, highlights a series of particularities that should be properly considered for their validation.offsetting, residents, non-residents, obligations

RISK MANAGEMENT’S IMPORTANCE AND ROLE IN AUDIT

The importance of treating this theme is proved by the current situation that economy and the entities activating on the market are confronted with. Risk is present in all the actions and event of humanity. Risk is in a permanent change, it evolves in complexity, among the traditional exposures to hazard other risks are added: operational, financial, strategic, market, country, legal, human, fraud risks and its complex character can be attributed to a range of factors that are grouped by the specialized literature in macroeconomic factors, also called extern, and microeconomic factors, also called intern. In the last few years, the importance of the corporate governance involvement in risk management is more and more recognized. The organizations are under the pressure of identifying all risks that it is confronted with starting with social risks, ethical and environment risks to those financial and operational, and also to the way it manages them at an acceptable level. In the same time, using integrated risk management procedures and politics at enterprise level (ERM-Enterprise Risk Management) has extended, in this way organizations are admitting the risk management approach advantages. The internal audit, in both his roles of providing assurance and consultancy, contributes to risk management in various ways, its importance being increasing due to the current financial crisis. For the financial auditor the term of risk has other senses, meaning that risks are regarded through the mission type and objectives. But still, identifying and measuring audit risks during the mission’s planning are strong connected to the existing risk management of the entity. In this way, if the audited entity has an implemented risk management that is proved to be efficient, this will represent a starting point for the auditor in evaluating the risks connected to his engagement, meaning that the general audit risk will be lower and the assurance level will be higher. More than that, an efficient enterprise risk management determines a higher level of trust in the internal audit department’s activity.Risk, risk management, internal audit, audit risk, efficiency

The impact of ias/ifrs on the romanian accounting rules

The accounting standardization process is in progress at international regional level, more and more countries have reached the same conclusion of enforcing high quality accounting standards like IAS/IFRS. At international level, on one hand it is thought to implement IASB's international standards and on the other hand, to converge American standards with IASB standards. There are various reasons for Romania adopting the IASB reference system, but most of them are subordinated to the central aim, respectively EU accession. There are also some secondary reasons required by the IAS/IFRS transition, which in our country is less present than in more economic developed countries. In our country accountancy is subordinated to the taxation system, financing still comes prevalent from banks and very few Romanian companies are listed on foreign capital markets. According to this, starting with 2006 the International Financial Reporting Standards (IFRS), as presented and published by the International Accounting Standards Board, shall be applied in Romania by the following categories of companies: trade companies applying OMF no. 94/2001, loan institutions, assurance and reassurance companies, institutions supervised by the National Commission for Movable Assets, independent public companies and other state owned companies, companies to be consolidated by a company applying IFRS standards, companies, which at the end of the previous year fulfilled two of the following three criteria: turnover exceeding EUR 7.3 Million, total assets over EUR 3.65 Million, average number of employees over 50, as well as other companies subject to the Finance Ministry’s approval.romanian accounting rules, IAS/IFRS, romanian accounting normalization body, capital market

The accounting profession and professionist in romania

An overview of the accounting profession’s evolution in Romania can only be a cause for reflection. As far as Romania is concerned, the accounting profession’s development rhythm followed the pace of the economic, social and political development of the country: first, formally speaking, as an association of graduates, subsequently organized as an association of public interest. The character of a liberal profession could occur whenever the market economy worked. The political and social changes of the mid-20th century generated a decrease of the economic importance of professional accounting mechanisms, as well as its position within the socialist system, especially in view of achieving accounting regulation expertise. Actually, the political events of 1989 led to a return to a period interrupted, about 50 years before. But the size and economic specificities were much different. This caused a rethinking of the accounting expert’s position, divisions in the accounting profession (Romanian Body of Experts and Chartered Accountants, Romanian Chamber of Auditors, the Chamber of Tax Consultants, etc.)

The accounting profession and professionist in romania

An overview of the accounting profession’s evolution in Romania can only be a cause for reflection. As far as Romania is concerned, the accounting profession’s development rhythm followed the pace of the economic, social and political development of the country: first, formally speaking, as an association of graduates, subsequently organized as an association of public interest. The character of a liberal profession could occur whenever the market economy worked. The political and social changes of the mid-20th century generated a decrease of the economic importance of professional accounting mechanisms, as well as its position within the socialist system, especially in view of achieving accounting regulation expertise. Actually, the political events of 1989 led to a return to a period interrupted, about 50 years before. But the size and economic specificities were much different. This caused a rethinking of the accounting expert’s position, divisions in the accounting profession (Romanian Body of Experts and Chartered Accountants, Romanian Chamber of Auditors, the Chamber of Tax Consultants, etc.)

Auditors’ perceptions on work adaptability in remote audit: a COVID-19 perspective

In the context of COVID-19, adoption of teleworking challenges companies’ culture and social interaction to foster a creative and innovative workplace. The article aims to identify the auditors’ perception of different factors that influence work adaptability in remote audit activity. The research method is based on multivariate data analysis that consist of correspondence analysis, exploratory factor analysis, confirmatory factor analysis and generalised linear ordinal regression. On one hand, findings emphasise that auditors’ perception on the work efficiency of auditors in remote audits is significantly influenced by the digitalization degree of audit activities. On the other hand, the research outlines the main threats and opportunities of remote auditing in the context of the current pandemic restrictions. Where auditors perceive the benefits of remote audit, they appreciate positively the degree of adaptability and work efficiency as regards teleworking. Opportunities perceived lead to enhanced audit activity outcome if audit companies embrace emergent technologies in the new digital workplace. Nevertheless, as transition to remote audit determines increased auditors’ liability and audit risks, auditors are more cautious and sometimes reluctant about future scenarios of remote audit, if innovative emerging audit technologies and integrated GRCs are not used or are not properly implemented. Whatever the future holds for the new digital audit workplace, it is obvious that auditors working from home face specific challenges, because what they earn in efficiency, they lose in benefits that are harder to quantify, such as innovative thinking and creativity

Auditor-Client Negotiation in Non-Financial Reporting Assurance Missions

This paper seeks to present the auditor-client negotiation process from non-financial assurance perspective, as to understand those factors that determine the way auditors conduct negotiations. For this, the authors analyzed a series of articles and publications extracted from Web of Science (WOS) or other research databases. These were selected based on their research topic, that focused mainly on auditor-client negotiation, assurance mission, and non-financial reporting. Further, the paper investigates most relevant research publications starting from year 2000 until present (from citations and journal ranking point of view) with the purpose of identifying those factors influencing the negotiation process when auditing non-financial information. In addition, this qualitative research represents a literature review synthesis of most relevant articles

The impact of ias/ifrs on the romanian accounting rules

The accounting standardization process is in progress at international regional level, more and more countries have reached the same conclusion of enforcing high quality accounting standards like IAS/IFRS. At international level, on one hand it is thought to implement IASB's international standards and on the other hand, to converge American standards with IASB standards. There are various reasons for Romania adopting the IASB reference system, but most of them are subordinated to the central aim, respectively EU accession. There are also some secondary reasons required by the IAS/IFRS transition, which in our country is less present than in more economic developed countries. In our country accountancy is subordinated to the taxation system, financing still comes prevalent from banks and very few Romanian companies are listed on foreign capital markets. According to this, starting with 2006 the International Financial Reporting Standards (IFRS), as presented and published by the International Accounting Standards Board, shall be applied in Romania by the following categories of companies: trade companies applying OMF no. 94/2001, loan institutions, assurance and reassurance companies, institutions supervised by the National Commission for Movable Assets, independent public companies and other state owned companies, companies to be consolidated by a company applying IFRS standards, companies, which at the end of the previous year fulfilled two of the following three criteria: turnover exceeding EUR 7.3 Million, total assets over EUR 3.65 Million, average number of employees over 50, as well as other companies subject to the Finance Ministry’s approval

THE RELEVANCE OF ACCOUNTING INFORMATION GENERATED BY THE APPLICATION OF IAS 29 RELATED TO SHAREHOLDERS CAPITAL

The current economic environment evolves under globalization circumstances, and it stands for the markets' globalization trend. Under these circumstances, information has a primordial role. The content of the transmitted information has changed significantly. As part of the economic information, the accounting information evolved as well and its whole circuit has been continuously modernized in the rhythm of the global changes. Thus, it had to adapt to the swing of capital markets worldwide and to aim toward a unique international accounting language, for the taste and understanding of its users. Historically, Romanian accounting records have been heavily influenced by the use of information for tax compliance purposes. The primary function of financial/accounting details collection and recording process has been seen by many Romanian entities and management/staff within the entities (both State and private) as being for taxation compliance and taxation reporting purposes. As a result of this, the reported information has tended to reflect a “form over substance” disclosure, that is, greater importance is placed on having particular documents or recording something in a specific way, rather than in “accurately” reflecting the financial position of the enterprise at a point in time or indicating whether the results for the period are an appropriate representation of what has occurred. Romanian accounting laws and regulations are not as such at fault, with the regulations providing for and encouraging treatments that are consistent in many ways with international accounting principles. Issues have however arisen on how laws and regulations are applied and have tended to reflect the background and outlook of Romanian accountants. Up to 31 December 2003, Romania was considered to be a hyperinflationary economy, under the criteria of IAS 29 “Financial reporting in hyperinflationary economies”. For Romanian statutory reporting, IAS 29 was not applied. In looking at financial statements where there are significant non-monetary items, users should keep this in mind and consider if there have been any revaluation of tangible and intangible assets and on what basis. The objective of IAS 29 is to establish specific standards for entities reporting in the currency of a hyperinflationary economy, so that the financial information provided is meaningful. Our empirical analysis encompasses a hyperinflationary economy covering a wide variety of hyperinflationary conditions