The Use of Professional Judgement in Romania. The Case of Factoring Contracts

Abstract

Switching from an accounting system based on compliance and enforcement of strict rules, to a system where the professional judgement plays a key role in the accounting valuation and recognition of assets and liabilities can be a difficult exercise. After 1989, an accounting reform began in Romania in order to adapt the accounting system at the new economic environment. At that time, the accounting system was characterised by a legal approach for the recognition of assets and liabilities. The nature and extent of disclosures were imposed by the regulator, leaving little freedom for accounting professionals to choose specific forms of presentation.

A few years later (1999), the regulators expanded the field of professional judgement by introducing IASC’s conceptual framework and elements of International Accounting Standards. The aim of this paper is to show that the conceptual elements of IAS/IFRS have influenced only to a small extent the professional judgement of accountants. For this we chose to analyse questions and answers posted on accounting forums regarding the accounting treatment of factoring agreements for which the accounting regulator has not yet issued specific regulations.

Keywords: Professional judgement, accounting regulation, accounting for factoring agreements, recognition of assets, recognition of liabilities

JEL Classification: M41