Academic journal article Global Economic Observer

National and International Norms on Accounting Policies and Procedures Applicable to Amortizable Tangible Fixed Assets. Impact on Patrimonial Result

Academic journal article Global Economic Observer

National and International Norms on Accounting Policies and Procedures Applicable to Amortizable Tangible Fixed Assets. Impact on Patrimonial Result

Article excerpt

1.Introduction

As Ristea and Jianu were writing, the increasingly more acute need for information in the public sector, as well as the need to provide comparable and transparent information resulted in the development and spreading of the International Public Sector Accounting Standards (IPSAS).[1]

The IPSAS were drawn up by the International Public Sector Accounting Standards Board and are mainly aimed at establishing the criteria for the recognition, evaluation, description and presentation of the information regarding transactions and events in financial reports with a general purpose.

Applying these standards isn't compulsory, but only recommended, as Tiron says - Tudor [2], and in case it is done, it will lead to a significant improvement in the quality of financial statements published by public institutions and, consequently, to a more informed evaluation of the decisions affecting the state resources, which will boost transparency and responsibility. [3]

In Romania, the development of accounting in the public sector was initiated in 2002 and imposed on all public institutions in 2005 [4] through the adoption of the Order of the Public Finance Minister No. 1917/2005 on the approval of the Methodological norms on the organization and conduct of public institutions accounting, the Plan of accounts for public institutions and its implementing instructions. Some of the IPSAS provisions were taken over in the aforementioned order.

Starting 2010, the public institutions of Romania must establish accounting policies that must observe the accounting legislation, the fiscal legislation and the one specific to the activity area. Taking into account the provisions of the accounting law No. 82/1991, the public institutions have drawn up accounting policies, approved by the credit release authorities.

When the legislation in force doesn't stipulate a clear rule that must be applied to a transaction, the management of the public institution exerts its professional judgment to draw up an accounting policy. Implementing the accounting policies, thus drawn up, must result in relevant and reliable information for their users in making decisions. The information reliability consists of accurately reflecting the financial position, the financial performance and the treasury flows of the public institution, reflecting the economic ground of the transactions and not just the juridical one, being neutral, prudent and complete.

The current paper presents the convergence and divergence between the national norms of organization and conduct of public institutions accounting, hereon called national norms, and the International Public Sector Accounting Standards concerning the accounting policies applicable to amortizable tangible fixed assets. Moreover, it stresses the impact on the result that the choices made by public institutions managers in respect to the accounting policies have. The importance of studying the impact of the accounting policies on the result consists of the fact that the latter shows the financial performance of the public institution and is an indicator influencing certain decision making.

To analyze the accounting policies applicable to tangible fixed assets, a normative research was conducted by carrying out an assessment of the IPSAS 17 "Property, Plant and Equipment" provisions, in relation to the national accounting norms referring to the accounting policies applicable to amortizable tangible fixed assets. The tangible fixed assets are elements holding a significant share in the total of assets owned by a public institution in Romania, thus their value presented in the balance sheet has a special importance in making decisions. The value presented in the balance sheet is influenced by the accounting policies adopted by the management of the public institution.

2.Accounting policies and procedures applicable to amortizable tangible fixed assets

The accounting policies represent the specific principles, grounds, conventions, rules and practices implemented by an entity in drawing up and presenting financial reports. …

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