Message of Prof. PhD. Ion Mihãilescu, EN-69fb.pdfMessage of Prof. PhD. Ion Mihãilescu, President...

Message of Prof. PhD. Ion Mihãilescu, President of the Chamber of Financial Auditors of Romania 3

2009 Activity Report Issued by The Council of the Chamber of Financial Auditors of Romania 5

I. The Relations between the Chamber and its Members 7

II. Internal Relations 23

III. Relations with the International Organizations 26

IV. Communication 32

Patrimonial and financial situation of the Chamber of Financial Auditors of Romania 34

The results of the 2009 financial activity of the Chamber 35

Summary

he year 2009 marked a decade since the establishment of theChamber of Financial Auditors of Romania, while the Romanianfinancial auditors and their professional body – CAFR – were formedand grew step by step until they reached the current performancelevel, in line with the internal and international exigencies of the pro-fession. The financial auditors have, therefore, all the premises toperform their activity not just in Romania. A desire expressed longtime ago thus becomes reality, namely that time would come whenthe Romanian auditor would also become a European auditor.

The road is lying ahead, now we must ensure the adequacy of our actions, weshould be actively involved in the development and the promotion of this profes-sion in the European area and beyond.

Should we retrospectively take a look at the Chamber’s activity, we could statethat the last period has been the most fruitful one, in what concerns the activityof the Romanian financial auditors. Thus, our professional body joined theInternational Federation of Accountants (IFAC), with over 159 member bodies in124 countries. In the same time, this period has also been full of troubles, whenefforts were made in order to align the national regulations with the Europeanprovisions; we are having in mind the Government Emergency Ordinance no.90/2008 on the statutory audit of the annual financial statements and consolidated annualfinancial statements, approved by the Law no. 278/2008, which implemented in the Romanianlegislation the European Directive 2006/43/EC, as well as the Law no. 26/2010 for the modi-fication and completion of the Government Emergency Ordinance no. 75/1999 on the finan-cial audit activity.

In the same time, the events taking place before our eyes, the global economic crisis whichalso hallmarked the Romanian economy, lays more stress on the importance on auditengagements for providing quality information by means of the audited financial statements,taking into account the ever increasing prudence manifested in the market for launching andre-launching business.

Message of Prof. PhD. Ion Mihãilescu,President of the Chamber of

Financial Auditors of Romania

T

32009 Activity Report

4 The Council of the Chamber of Financial Auditors of Romania

Engaged in supporting the efforts of its members to answer efficiently to the challenges of theperiod we are encountering, which, as it can be noticed from the accompanying Report,inevitably affected the market of our services in the previous year, as well as in the period thatpassed from the year 2010, the Council of the Chamber acted firmly and perseveringly fortransposing into facts the Program established at the preceding annual Conference and in theResolution adopted during the second Congress of financial auditors, that took place in Cluj-Napoca. The Council reached out for these purposes, by trying to exploit the ideas, solutionsand effective proposals received from the auditors and other professionals, on different occa-sions. Therefore, everything that had been planned has been accomplished, and the prestigeof the profession has been consolidated and amplified, both in Romania and at internationallevel.

In the following year, the last year from the mandate of the current Council, there are manychances so that the Romanian professionals in the financial audit activity can continue to risefrom the ranks, by transposing the objectives of the Activity Program submitted to theConference for approval.

The message that we want to send to the Romanian society and to the global economy struc-tures is that financial auditors are capable and determined to efficiently contribute to overcom-ing the current economic crisis, making the most of their professional talent, training and con-science and of serving the public interest, taking into consideration that, nowadays, a climateof trust is more necessary than ever. Trust in the reliability and efficiency of business devel-opment projects, as well as in a conduct based on honesty, as a primary component of theorganizational culture of the future.


n accordance with the provisions of the Government Emergency Ordinance no.75/1999, republished with the subsequent modifications and completions, theCouncil of the Chamber of Financial Auditors of Romania took into considerationthe achievement of certain strategic objectives established for the period 2006-2010, as approved by the 2006 Annual Conference.

The year 2009 was an anniversaryyear for the Chamber, marking thecelebration of 10 years since itsestablishment. On this occasion, thepublication „Romanian FinancialAuditor – a decade in serving publicinterest” was issued. The momentumwas underlined by the organization,at 26 June 2009, of the secondCongress of Financial Auditors inCluj-Napoca, the central theme ofthe Congress being „National andInternational in the financial auditactivity. Auditors and the global eco-nomic crisis”. Taking this opportunity,distinctions and special medals cele-brating „10 years of activity” wereawarded to the personalities whosupported the development of theChamber, both at internal and international level. The presentations made during this con-gress have been also included in a handbook published by the Chamber.

One of the main objectives and responsibilities of the Chamber of Financial Auditors ofRomania, in its quality of full member of the International Federation of Accountants (IFAC)and as a professional body managing, coordinating and authorizing the development of the

2009 Activity Report Issued by The Council of the

Chamber of Financial Auditorsof Romania

I


financial audit activity in Romania, was to play a leading role in the process of translating inRomanian language, the International Standards on Auditing (ISAs) and the IFAC Code ofEthics and in promoting their knowledge and use by the financial auditors and the financialaudit trainees.

The Chamber continued to play an important part in the IFAC Member Body ComplianceProgram. The country Action Plan, related to Part 3 of the Compliance Program is availableon the IFAC website since September 2008, and in 2009 the Chamber updated its actions andimplementation measures comprised in this material.

In 2009 the Chamber obtained, for the fourth year in a row, the IFAC copyright for the trans-lation of the International Standards on Auditing.

In January 2009 the „Handbook of International Auditing, Assurance, and EthicsPronouncements” was published and approved by the Chamber’s Council Decision no.138/2009.

In August 2009 the translation process of the Clarified International Standards on Auditingwas finalized, these standards were approved by the Chamber’s Council Decision no.152/2009, being applicable beginning with 1 January 2010.

Under the coordination of the Chamber’s Council the 3rd edition, reviewed and amended, ofthe Handbook on certain auditor professional regulations was published.

The Chamber’s Council has been permanently concerned with the update of the GovernmentEmergency Ordinance no. 75/1999 on the financial audit activity, republished, in order for it tobe in line with the provisions of the Government Emergency Ordinance no. 90/2008 on thestatutory audit of annual financial statements and the consolidated financial statements,approved by the Law no. 278/2008.

The Chamber’s Council has been continuously involved in the legal process concerning themodification of the GEO 75/1999, which was finalized in 2010 by the adoption of the Law no.26 of 5 March 2010, published in the Official Journal of Romania, Part I no. 145/2010.

In the year 2009, 12 meetings of the Council of the Chamber took place and within thesemeetings 19 decisions have been approved. Also, 13 meetings of the CAFR board were heldand 5 decisions have been adopted.


t the end of 2009, the Chamber’s registry comprised 3241 active members physi-cal persons, 503 non-active members and 851 audit firms.

By the activity it deployed, the engagement of the Chamber’s Council in terms of the rigourimposed during the professional access exams can be noticed; thus, during the admissionsession which took place in 2009, the passing rate reached 51.7% and 56%.

According to the legal provisions, in 2009 two sessions of the professional aptitudes exam forgranting the financial auditor quality were held (in May and November).

The exam was attended by the candidates who had finished the training period and who,according to the law, were entitled to pass the exam sessions within 3 years since the end ofthe practical training.

The exam sessions were held during three days, as follows:

Written test, comprising questions from the field of financial audit, internal audit andaccountancy;

Multiple choice test, comprising multiple choice questions from the field of commer-cial law, fiscal law, civil law, labour law, IT systems, mathematics and statistics;

Practical test, comprising practical issues related to the financial audit activity.

a. May 2009 session

- Participants: 365 candidates,

- Admitted: 205 candidates (56%)

b. November 2009 session

- Participants: 497 candidates,

- Admitted: 257 candidates (51.7%)

II. The Relations between theChamber and its Members

A

Access to the practical training, financial audit activity training and professional development The Chamber organized in 2009 a session of the assessment test in the financial-accountan-cy field for granting the access to practical training.

After having passed the test organized on the 31 October 2009, 415 candidates have beendeclared admitted.

In 2009, the Chamber also concluded Memorandums of Understanding with different univer-sities, in view of recognizing the exam for access to the practical training for master gradu-ates.


Following the signature of the Memorandums of Understanding with the academia and afterthe analysis of the files received, the exam for access to the practical training has been rec-ognized as equalling the respective master programs comprised in the MoUs, for a numberof 95 persons.

Throughout the year 2009 two series of courses took place, addressed to the trainees:

25 – 27 September, the course for the first year of practical training trainees

- the course was attended by 131 persons,

- the fee of the course was 450 lei and it has been paid in full by the trainees,

- the course ended by a multiple choice test, based on the subjects thought during thecourse.

The themes of the course (25 hours) comprised the following subjects:

a) Introduction in the Code of Ethics and main principles

b) Independent auditor’s objectives and general principles

c) Planning a financial statements’ audit

d) Audit threshold

e) Audit sampling and other testing methods

f) Internal audit and corporate governance

g) First time application of the IFRSs

h) Accounting policies and procedures

18 September – 1 November, the course related to the other categories of trainees(second or third year of practical training, candidates in the examination period, etc.)

- out of the 2591 trainees registered by the Chamber, a number of 1876 persons attend-ed this course,

- the fee of the course was 450 lei + VAT and it has been paid in full by the trainees.

The themes of the course (25 hours) comprised the following subjects:

a) Fees and other types of information

b) Audit documentation

c) Auditor’s report on the financial statements and changes of the opinion in the inde-pendent auditor’s report

d) Quality control in the audit activity

e) Audit evidence

f) External confirmations


g) Internal audit base don the risk analysis

h) Interim financial reporting

i) Accounting policies and procedures

Professional development

The professional development of the members of the Chamber – financial auditors andtrainees in the financial audit activity is taking place in accordance with the requirements ofthe International Educations Standards issued by IFAC, by means of the continuous profes-sional development program, but also by the attending other specialized courses.

The continuous professional development is mandatory for all the members of the Chamberand consists of 40 hours per years, 20 structured hours and 20 unstructured hours, organizedwithin the Continuous Professional Development Program, corresponding to the provisions ofthe Chamber’s Council Decision no. 110/29 January 2008.

Structured continuous professional training includes:

a) participation at the compulsory annual courses, organized by the Chamber; the curric-ula and the organization of these courses and workshops are decided by theChamber;

b) participation at the professional courses organized by the professional bodies in thefield, at national or international level, with which CAFR has concluded Memorandumsof Understanding. The recognition is made based on the following documents: writtenevidence/certificate of attendance and the themes of the respective course.

The unstructured continuous development includes:

a) participating at or teaching courses in the field – these are equivalent to 10 hours /course (proved by the certificate of attendance and the themes of the respectivecourse);

b) participation at workshops, congresses or conferences organized by the professionalbodies at national or international level (IFAC member bodies) – these are equivalentto 4 hours for each specialized event; the recognition is made based on the attendanceevidences kept by the Chamber, respectively, based on the certificate of attendanceissued by the IFAC member body, or any other document attesting the effective partic-ipation in an event, for example, an invitation, the event agenda, etc.;

c) participation at post graduate studies, master or PhD studies in the field – these areequivalent to all the 20 hours required; the recognition is made based on a certificate;

d) publishing a book in the field –20 hours are recognized;


e) developing and publishing specialized materials (the document should have at least 3pages) – 4 hours/material are recognized.

Quality of services

The monitoring and the control of the professional services provided by financial auditors rep-resent a primary objective of the Chamber. Our organization has always been concerned withmaintaining the quality in the field of financial audit services. The activity developed in 2008targeted the following areas:

I Establishment of the monthly inspection programs;

II Accomplishment of the Chamber’s strategic objectives on the monitoring andcoaching of the auditors who obtained D, C and B ratings;

III Observance of the Chamber’s Council Decision no. 44/23 March 2005;

IV Other regulatory and representation activities.

Inspection activity

In performing its attributions stipulated in the Organization and FunctioningRegulation of the Chamber, in the year 2009 the Monitoring and ProfessionalCompetence Department continued to perform inspections of the quality of thefinancial audit activities provided by the financial auditors, physical and legal per-sons, members of the Chamber.

The specific regulations applied for the purposes of these inspections consisted of:

- Norms on the quality control of the financial audit activity and related services,approved by the Decision no. 70/14 August 2006 of the Chamber’s Council;

- Quality control procedures of the financial audit activity and related services, approvedby the Decision no. 73/20 September 2006 of the Chamber’s Council;

- the new Norms on the quality control of the financial audit activity and related servic-es, approved by the Decision no. 139/24 March 2009 of the Chamber’s Council, pub-lished in the Official Journal of Romania, Part I, no. 308 of 11 May 2009.

1. In 2009 the quality control inspections comprised the engagements performed by thefinancial auditors planned in the third inspection cycle, according to the provisions of theinspections plan approved by the Council of the Chamber, as well as to the Chamber’sstrategic objectives for the period 2006 -2010 established by the Conference.


Thus, in the reporting period, a number of 303 financial auditors - members of the Chamberwere subject to the quality control inspections, out of which 185 (61%) were audit firms and118 (39%) were physical persons, domiciled in Bucharest and in the following counties:Braºov, Galaþi, Cluj, Timiº, Gorj, Dolj, Brãila, Bistriþa Nãsãud. Also, based on the approval ofthe 25 November 2008 meeting of the CAFR Council, the Monitoring and ProfessionalCompetence Department carried out, in the first quarter of 2009, a reassessment program ofthe financial auditors who obtained C and D ratings during the inspections performed in theperiod 2007-2008, domiciled in Bucharest, Arad, Argeº, Bacãu, Braºov, Constanþa, Covasna,Dâmboviþa, Dolj, Galaþi, Harghita, Iaºi, Mureº, Neamþ, Prahova, Suceava, Teleorman, Vâlceaand Vrancea.

In relation to the corresponding periods of the previous years, 2007 and 2008, the scope ofthe quality inspection underwent the following dynamics:

In 2009, as we can see from the data above, 303 members of the Chamber have been con-trolled, out of which qualitative ratings were granted to 284 auditors, representing 98% com-pared to the auditors assessed in 2008 and, respectively 87% compared to 2007.

The majority of the controlled auditors performed financial audit engagements. In the sametime, based on the specific procedures developed, certain related services and other servic-es provided by certain financial auditors have also been included in the scope of the qualitycontrol.

Out of these auditors, 68 members only provided other non-audit engagements, and 52 mem-bers only performed non-assurance engagements, as follows:


Following the inspections performed in 2009, a medium observance degree of the objectivesselected from the Quality control procedures of the financial audit activity and related servic-es, approved by the CAFR Council Decision no. 73/20 September 2006 has been ascer-tained. This observance degree, classified into ratings categories is shown in the table below:

Compared to the previous years, the ratings granted in 2009 underline a decrease of the qual-ity of the activities performed by the financial auditors - members of the Chamber, by theincrease of the D and C ratings and the decrease of the A rating assigned to the controlledauditors. It has been noticed that certain objectives and specific tests continue to be docu-mented and performed by the auditors who received unsatisfactory ratings, especially in whatregards other engagements categories, as shown below:


It should be mentioned that financial auditors who were assessed and received D and C rat-

ings register a performance level under the medium one, both in what regards the exempli-

fied objectives, and other significant tests.


Monitoring and coaching of auditors who received D, C and B ratings

The CAFR Council approved the organization of an additional mandatory course, in July2009, for the financial auditors who received D, C and B ratings in the period May 2008 - June2009, in accordance with the provisions in art. 29 of the Norms on the quality control of thefinancial audit activity and related services, approved by the Decision no. 139/2009. Thethemes approached by this course were:

General objectives and principles governing an audit – International Standard onAuditing (ISA) 200;

Quality controls for firms that perform audits and reviews of financial statements, andother assurance and related services engagements – International Standard onQuality Control 1 (ISQC 1);

Subsequent events – International Standard on Auditing (ISA) 560;

Going concern principle - International Standard on Auditing (ISA) 570;

Code of ethics of professional accountants – assurance engagements (Section 290);

Written representations - International Standard on Auditing (ISA) 580.

The themes have been selected based on the 1st 2009 semester and 2008 findings, duringthe activity analysis of the Monitoring and Professional Competence Department, of thelower achievement rate objectives. The course was attended by 132 financial auditors whoobtained, during the inspections, D, C and B ratings.

Observance of the CAFR Council Decision no. 44/23 March 2005

In order to apply the art. 25 provisions of the 2006/43/EC Directive of the EuropeanParliament and Council, the inspection teams continued in 2009 to control the finan-cial auditors’ means of establishing and allotting the time budget needed for theaudit engagements.

218 auditors, among those inspected in 2009, were comprised in this assessment, comparedto 157 auditors in 2008, out of which 150 audit firms and 68 physical persons; the followingissues have been noticed:


1. The situation of the fees calculated based on the data declared by the financial auditors,for the audit engagements selected for inspection, is shown below:

The decrease with 6.441 lei (21%) of the medium fee/engagement can be noticed, comparedto 2008, while the minimum fee continues to reach a relatively invariable level (1.094 lei,namely 273 Euros).

2. Taking into consideration the number of persons employed for performing the audit engage-ments, as well as the time budget declared, the fees can be described as follows:

In 2009, the minimum value of the fees per hour, of 18,52 lei/hour, namely 4,64 Euros, wasregistered at the level of an entity assessed with a C rating, corresponding to an engagementwith a contracted value of 5.000 lei (1.255 Euros), performed by two persons, within a 270hours time budget allotted.

Also, a physical person achieved an hourly average of 11,11 lei (2,79 Euros) while providingan engagement for the value of 2.000 lei, with a 180 hours time budget allotted, performed bya single person.


In 2009, the maximum fee per hour, reaching 297,06 lei/hour (74,54 Euros) was registered atthe level of an audit firm assessed with an A rating, corresponding to an engagement with acontracted value of 172.590 lei (43.307 Euros) within a time budget of 581 hours.

Also, a physical person achieved an hourly average of 154,08 lei (38,66 Euros) in performingan engagement for the value of 64.712 lei, with a time budget of 420 hours, granted to anaudit team composed of four persons.

The level of the average revenue of the accomplished fee per hour, resulting form the qualityinspections performed during the previous financial exercise, which had been taken into con-sideration by the auditors in calculating the variable fees payable to the Chamber, reached91,81 lei/hour, namely 23 Euros/hour.

Most of the non-observance cases of the minimum time budget needed for finalizing the finan-cial audit engagements are related to obtaining the C and D ratings.

Professional deontology

The members of the Chamber of Financial Auditors of Romania have to comply with the eth-ical requirements; the non-compliance with the ethical principles can trigger a behaviouralinvestigation conducted by the Department of Ethics, Professional Conduct and Investigationsand the application of corresponding sanctions.

In 2009, 14 claims have been registered at the level of the Department of Ethics, ProfessionalConduct and Investigations. Out of these claims, 8 financial auditors were imposed the sanc-tion of „suspension of the activity for 6 months”, and 3 auditors were imposed the „warning”sanction.

The ethical requirements are carried into effect by means of the continuous professionaldevelopment courses and regional seminars, meant to ensure that all professionals – finan-cial auditors – are aware of all ethical requirements, as well as of the observance of theserequirements.


Main actions carried in 2009

The Council of the Chamber put all its efforts in ensuring that all the events that took placeduring this year, conferences, seminars, meetings and other manifestations bring forth therole and the place of the financial auditor in the Romanian financial audit activity.

In 2009, the professional seminar entitled „Financial audit approaches” was held in 8 devel-opment regions.

By organizing this seminar, in different development regions, according to the schedule pre-viously approved by the Council, the Chamber intended to offer support to its members, bymeans of open discussions on the most important issues related to their activity. On the occa-sion of these meetings, the representatives and the alternates at the annual Conference werealso elected.

17 JANUARY 2009, Cluj-Napoca, North-Western region

- This seminar was addressed to the financial auditors from Bihor, Bistriþa Nãsaud, Cluj,Maramureº, Sãlaj and Satu Mare.

- The guests gathered members from Cluj-Napoca, beneficiaries of the financial auditservices, PhD students of the Babeº Bolyai University, representatives from local pro-fessional bodies and the local mass-media.

- The themes were presented by Emil Culda, vice-president, Carmen Mataragiu, CAFRCouncil member and Tom Delaney, ACCA member.

31 JANUARY 2009, Braºov, Central region

- This seminar was addressed to the financial auditors from Alba, Braºov, Covasna,Harghita, Mureº and Sibiu.

- The guests gathered representatives of the local mass-media.

- The themes were presented by Eugen Nicolãescu, first vice-president, Emil Culda andHoria Neamþu, vice-presidents of the CAFR Council.

14 FEBRUARY 2009, Râmnicu-Vâlcea, South-Western region

- This seminar was attended by financial auditors from Dolj, Gorj, Mehedinþi, Olt,Vâlcea.

- The works of the seminar were opened by the CAFR President, Prof. PhD. IonMihãilescu, who held a presentation on the Financial Audit Approaches 2008-2009.

- The speakers included Georgeta Petre, CAFR Council member, representing theMinistry of Public Finances, Urania Moldovanu, head of the Monitoring andProfessional Competence Department and Prof. PhD. Ali Eden, CAFR vice-president.


26 OCTOBER 2009, Timiºoara, Western, North-Western region

- According to the Decision of the CAFR Council, the day of 26 October of each year

celebrates the National Day of the Financial Auditor. On this occasion, a professional

seminar was organized, where the President of the Chamber, Prof. PhD. Ion

Mihãilescu, read the message of the Chamber’s Council addressed to the financial

auditors. This message was also posted on the CAFR website.

- Financial auditors from Arad, Caraº – Severin, Hunedoara, Timiº, Bihor, Bistriþa-

Nãsãud, Cluj, Maramureº, Sãlaj, Satu Mare attended this seminar.

- This event also provided an opportunity for signing two Memorandums of

Understanding between the Chamber of Financial Auditors of Romania and:

The Chamber of Hungarian Auditors, represented by its international relations vice-

president, Ferenc Eperjesi;

The All-Auditors Union of Ukraine, represented by its vice-president, Mikhail

Krapivko;

The National Association of Romanian Appraisers (ANEVAR), represented by its

president, Adrian Vascu.


21 MARCH 2009, Iaºi, North-Eastern region

- The participants were the fi-nancial auditors from Bacãu,Botoºani, Iaºi, Neamþ, Suceava,Vaslui.

- Representatives of the local in-stitutions and the mass-mediawere invited to attend this event.

- The CAFR President, Prof. PhD.Ion Mihãilescu, opened theseminar and held a presentationon the Financial Audit Ap-proaches 2008-2009.

- Prof. PhD. Ali Eden, CAFR vice-president and Smaranda ªtre-angã, training director BDOConti Audit were the mainspeakers of this seminar.

- The seminar gathered representatives of the local institutions and professional bodies,of the local and Bucharest mass-media, namely: the National Association of RomanianAppraisers (ANEVAR), the Union of Liberal Professions of Romania (UPLR), theNational Union of Insolvency Practitioners form Romania (UNPIR), the Chamber ofTax Advisors (CCF), the Centre for Promoting Foreign Commerce (ANEIR),PricewaterhouseCoopers, Ernst&Young, KPMG, ACCA, the Bucharest StockExchange, the National Bank of Romania (BNR).

- The professional themes were presented by univ. prof. PhD. Ioan Talpoº, rector of theWest University of Timiºoara, Carmen Mataragiu, CAFR Council member, Smarandaªtreangã, BDO Conti Audit SRL director, Mariana Ciurel, Strategies and developmentexpert – French Corporate Governance Institute of the Bucharest Stock Exchange.

12 DECEMBER 2009, Piteºti, South-Western region

- The audience was composed by financial auditors from Argeº, Cãlãraºi, Dâmboviþa,Giurgiu, Ialomiþa, Prahova, Teleorman, Dolj, Gorj, Mehedinþi, Olt, Vâlcea.

- The speakers included Prof. PhD. Ion Mihãilescu, CAFR president, Prof. PhD. MariaManolescu, CAFR Council vice-president, Prof. PhD. Eugeniu Þurlea, CAFR Councilmember and Mircea Bozga, PWC insurance director.

In 2009, one of the major challenges of the Chamber was represented by the organization, inCluj-Napoca, of the Second Congress of the Chamber of Financial Auditors of Romania,entitled „National and International in the financial audit activity. Auditors and globaleconomic crisis”- 26 June 2009.

The Congress was considered avery successful event, both due to itsthemes of interest and to the profes-sional debates, but also from thepoint of view of the participation of alarge number of guest, representa-tives of many institutions and organi-zations in the field, at national andinternational level. Our guestsincluded:

Anton Colella, ICAS chiefexecutive,

Paul Thompson, senior direc-tor, IFAC Small and MediumSized Practices Committee,

Mark Gold, ACCA deputypresident,


Pierre Berger, IRE Belgium president,

Geoffrey Britton, EFAA President and Federico Diomeda, EFAA CEO,

Brigitte Guillebert, deputy director CNCC France,

Veaceslav Ciobanu, ACAP Republic of Moldova president,

Dragan Mikerevic, SRRRS, Srpska Republic, president,

Waclaw Nitka, Council member of the National Chamber of Statutory Auditors ofPoland,

Boyko Kostov, Council member of IDES Bulgaria.

On the occasion of the Congress, three Memorandums of Understanding have been signedby the Chamber of Financial Auditors of Romania and:

- The Institute of Chartered Accountants of Scotland,

- The Institute of Chartered Accountants in England and Wales, and

- The Institute of Certified Public Accountants of Bulgaria.



1. Collaboration with the academia

The Chamber of Financial Auditors of Romania continued in 2009 the tradition of attendingthe AMIS International Conference (the IV edition) organized by the Faculty of Accounting andManagement Information Systems.

2. Collaboration with the Accounting and Financial ReportingCouncil

The President of the Chamber and several other CAFR representatives were active partici-pants to all the meetings organized by the Accounting and Financial Reporting Council(CCRF), the Chamber being asked to contribute to the debates and consultations on prepar-ing the legislation for adapting to the new European and international requirements.

3. Collaboration with the Public Oversight Board of theStatutory Audit Activity (CSPAAS)

The Superior Council of CSPAAS includes the President of the Chamber, Prof. PhD. IonMihãilescu, as well as Vasile Iuga, CAFR member.

Ever since 2008, when this body was established, the Chamber of Financial Auditors sparedno effort in supporting the activities of initiating and preparing all the necessary documenta-tion for CSPAAS organization and operations.

4. Collaboration with the Body of Expert and LicensedAccountants of Romania

On the 31 August 2009, in Mamaia, during an extraordinary meeting of the members of theChamber’s Council and of the members of CECCAR’s Superior Council, an Agreement wasconcluded through which the two bodies decided pooling resources and means for a coordi-nated tracking and management of the international issues of the accounting profession byestablishing the International Relations Coordination Council – CCRI; this Council is designedto serve the international interests of the entire Romanian accounting profession.

II. Internal Relations


5. Collaboration with the Bucharest Chamber of Commerce andIndustry (CCIB) and with the Chamber of Commerce andIndustry of Romania (CCIR)

For a better collaboration between financial auditors and the representatives of the Romanianbusiness environment CAFR signed, in 2009, two Memorandums of Understanding with CCIRand CCIB, respectively.

6. Collaboration with the Managing Authority of the SectorialOperational Program for Human Resources Development(AMPOSDRU), of the Ministry of Labor, Family and SocialProtection

Following the 2008 Memorandum of Understanding concluded between CAFR and AMPOS-DRU, in 2009 two courses of lectures were organized, with the participation of the Chamber’srepresentatives, between 12 and 15 May 2009 and between 12 and 14 August 2009. Thesecourses of lectures presented the European Union mechanisms for granting European funds,the institutions responsible for non-returnable external funds, the legal requirements regard-ing the management systems, the internal control system etc.


Attending national events

The Conference organized by the National Office for Prevention andControl of Money Laundering

A delegation of the Chamber attended on 10 June 2009 the conference organized by theNational Office for Prevention and Control of Money Laundering with the title “A former moneylaunderer tells us how it’s done”.

The Fourth International Conference on Internal Audit in CentralEuropean Region

The Chamber’s Vice-President, Prof. PhD. Ali Eden, represented the CAFR at thisConference, organized between 10 and 12 of September 2009 by the Romanian Associationof Internal Auditors.

Attending the Economic Fest fair, 15-18 October 2009

The Chamber of Financial Auditors of Romania attended this economic-legal fair, that tookplace at World Trade Center Bucharest, having its own exhibition stand and it organized aprofessional seminar on 15 October 2009. The Chamber’s stand presented the activity of theCAFR, information on the services provided by this professional organization and by its mem-bers and, also, sold books edited by CAFR.

The second edition of the Day of the Romanian Liberal Professions

On 5 November 2009 CAFR representatives attended the conference organized by theRomanian Union of Liberal Professions on the occasion of the “Liberal Professions’ Day”. Thetheme of the Conference was “The relations between the liberal professions and publicauthorities, institutions and relevant organizations in Romania and abroad”.


1. International Federation of Accountants (IFAC)IFAC Annual Council in Washington, USA – 16-18 November 2009. The delegation ofthe Chamber of Financial Auditors of Romania, composed of Prof. PhD. IonMihãilescu, CAFR President and Ms. Adriana Coºa – International Relations Expert,traveled to Washington, USA, to participate to the Annual Council of the InternationalFederation of Accountants (IFAC), as the Chamber is a full member of the above men-tioned.

The appointment of Ms. Carmen Mataragiu, member of the Chamber’s Council, asmember in the IFAC Developing Nations Committee. As a full member of IFAC, theChamber submitted this year proposals for nominations in IFAC Boards and Commit-tees. Following a strict selection process, Carmen Mataragiu has been appointedmember of the Developing Nations Committee for a two-year mandate, between 2010and 2012.

2. International Federation of Francophone ExpertsAccountants (FIDEF)

As a full member of the International Federation of Francophone Experts Accountants(FIDEF), the Chamber of Financial Auditors of Romania participated, represented by itsPresident, Prof. PhD. Ion Mihãilescu, to the FIDEF General Assembly that took place in LaBaule, France, on 14 October 14 2009.

3. United Nations Conference on Trade and Development (UNCTAD)

On the 1st of July 2009, CAFR participated to the UNCTAD Conference regarding the FinancialCrisis that took place in Genève, Switzerland, through the delegation composed by EugenNicolãescu, CAFR First Vice-president and Irina Pungaru, International Relations Expert.

4. World Bank

The dissemination event for the first update of the Report for Romania on theObservance of Audit and Accounting Standards and Codes (ROSC)

On 29 June 2009, a dissemination ceremony for the first update of the ROSCReport for Romania took place in Bucharest. This ceremony was attended by repre-

III. Relations with the InternationalOrganizations

sentatives of the Ministry of Finance, of the Romanian professional and regulatorybodies (CAFR and CECCAR), Big Four representatives, together with John Hegartyand Pascal Frerejacque on behalf of the World Bank. The event was also attended bymanagement members of the Federation of European Accountants, FEE: Hans vanDamme, President and Olivier Boutellis-Taft, Chief Executive.

During 2009 several meetings took place between the Chamber’s representatives andrepresentatives of the Romanian Government, of the Swiss Government and of theWorld Bank regarding the commencement of the Technical Assistance Project forRomanian Financial Reporting undertaken together with the World Bank and the SwissGovernment. Thus, several negotiations took place with regard to the SWISS-ROcooperation project, a project that is supposed to be carried over a period of 10 yearsat the most, according to which Romania should receive a 2 million Swiss Francssponsorship for strengthening the Romanian financial reporting system.

5. The Federation of European Accountants (FEE)On 20 May 2009, the CAFR President, Prof. PhD. Ion Mihãilescu, participated a theAnnual Audit Standard-Setters Meeting, at the FEE offices in Brussels, Belgium, wherean European Commission delegation was present along with the FEE managementand representatives of all FEE member bodies.

At the end of this event, Prof. PhD. Ion Mihãilescu had a meeting with Hans vanDamme, FEE President and with Olivier Boutellis-Taft, FEE Chief Executive, regardingthe steps the Chamber of Financial Auditors of Romania should take in order tobecome a FEE full member.

Carmen Mataragiu, Chamber’s Council member, participated on the 1st of October2009 at the Taxation Day, organized by FEE in Brussels, Belgium.

Another meeting between the Chamber’s President and the FEE President took placein Nantes, France, on the occasion of the Congress of the Order of Expert Accountantsof France (OEC), on 15 October 2009. During this meeting, discussions were carriedabout the cooperation of the Romanian professional bodies, about the accounting pro-fession and the audit profession in our country, as well as about the adhesion processof a professional body to FEE.

6. The European Commission During the translation process of the Clarified International Standards on Auditing,2009 edition, IFAC granted the Chamber of Financial Auditors of Romania the copy-right to translate the Standards and the Chamber closely collaborated with the InternalMarket and Services Directorate General and with the Directorate General forTranslations. Thus, the Standards translated by the Chamber have been also reviewedby the European Commission’s translators, the process being completed in December2009. It is estimated that these Standards would be adopted at the Community’s leveland will be published in the EU Official Journal between 2010 and 2011.


Two meetings of the experts involved in ISAs translation took place in Brussels, Belgium,at the headquarters of the Internal Market and Services Directorate General on 21 January2009 and 1st October 2009.

7. The Federation of Mediterranean Accountants, FCM

In May 2009 the Chamber of Financial Auditors of Romania submitted its membership appli-cation to the FCM Secretariat in order to become a FCM full member. As FCM is in theprocess of changing its Statutes, as soon as the new Statues are approved, the Chamber willreceive an official answer to its application.

Relations with the International Professional Bodies

1. The Association of Chartered Certified Accountants (ACCA)

The excellent collaboration betweenthe Chamber and ACCA continued in2009; ACCA participated with lectur-ers to regional seminars as well as tomajor events, such as the SecondCongress of Romanian FinancialAuditors in Cluj-Napoca, on 26 June2009 and the Seminar organized forthe Auditor’s Day in Timiºoara, on 24October 2009.

According to the 2008 Memorandumof Understanding between ACCAand the Chamber, on the 24 and 25September 2009, in Satu-Mare, thefirst seminar of the technical semi-nars series took place, with the par-ticipation of ACCA lecturers, dis-cussing the International Standardson Auditing, International AccountingStandards and International Finan-cial Reporting Standards.

2. The Institute of Chartered Accountants of Scotland (ICAS)

During the Chamber’s Congress in Cluj-Napoca, on 26 June 26 2009, ICAS and the Chambersigned a Memorandum of Understanding; the signing ceremony was attended by Anton Colella, ICAS Chief Executive and the Chamber’s President, Prof. PhD. Ion Mihãilescu.


The collaboration with the Institute ofChartered Accountants of Scotlandcontinued during 2009, mainly withthe Chamber purchasing the Pro-cedures for Quality Audit tool pub-lished by ICAS. This material wastranslated in Romanian and jointlypublished by ICAS and the Chamberin the course of 2010.

3. The Institute of Certified Public Accountants in Bulgaria

Also during the Chamber’s Congress in Cluj-Napoca, on 26 June 2009 the professionalorganizations in Bulgaria and Romania signed a Memorandum of Understanding.

4. The Institute of Chartered Accountants in England and Wales (ICAEW)

On the occasion of the Chamber’sNational Conference in Cluj-Napoca,on 27 June 2009, a Memorandum ofUnderstanding has been concludedwith ICAEW; during the signing cer-emony the Institute was representedin Romania by its President, MartinHagen.

During 2009 several bilateral meet-ings took place between ICAEW andthe Chamber’s representatives.



5. The Order of Expert Accountants of France (OEC)

The Chamber of Financial Auditors attended the 64th OEC Congress, between 15 and 17October 2009, in Nantes, France. The theme of this year’s Congress was „From Accountingto Finance. A call for trust”. The CAFR delegation was composed of Prof. PhD. Ion Mihãilescu,President, Emil Culda, Vice-president and Adriana Coºa, International Relations Expert.

6. The National Company of French Auditors (CNCC)

The Chamber attended the General Assembly of the National Company of French Auditorsthat took place in Paris, France, on 4 December 2009. The Chamber’s representatives to thisevent were Emil Culda, Vice-president and Irina Pungaru, International Relations Expert. Thetheme of this year’s General Assembly was „Audit’s Adaptability – an economic growth vec-tor”.

7. The National Chamber of Statutory Auditors (KIBR)

The Chamber attended the 10th KIBR Annual Audit Conference, on the 4 and 5 November2009. Prof. PhD. Ion Mihãilescu addressed a welcome message on behalf of the Council ofthe Chamber of Financial Auditors of Romania.

8. The Chamber of Hungarian Auditors (MKVK)

On 24 October 2009, during the Timiºoara event that celebrated the Financial Auditor’s Day,a Memorandum of Understanding has been signed with the MKVK. This Memorandum wassigned, on behalf of the Hungarian body, by Ferenc Eperjesi, International RelationsExecutive Director.

9. All-Auditors Union of Ukraine (UAA)

Between 27 and 29 May 2009, the Chamber’s President attended in Harkov, Ukraine, theInternational Scientific and Professional Conference, on the «Experience of Introducing andImplementing the Internal Quality Control Standards in Audit Firms». During this conferenceProf. PhD. Ion Mihãilescu delivered a presentation entitled „Audit Activity Quality Control”.

On 24 October 2009, during the Financial Auditor’s Day in Timiºoara, a Memorandum ofUnderstanding has been signed with the All-Auditors Union of Ukraine. The Ukrainian organ-ization was represented in Timiºoara by Mikhail Krapivko, Vice-president.


10. The Chamber of Auditors of Azerbaijan Republic

Between 4 and 7 May 2009, a delegation of the Chamber, led by President Prof. PhD. IonMihãilescu traveled to Baku, Azerbaijan, to participate to several bilateral meetings and to thesigning ceremony of a Memorandum of Understanding with the Chamber of Auditors ofAzerbaijan Republic.

11. Association of Professional Accountants and Auditors of theRepublic of Moldova (ACAP)

Between 10 and 12 December 2009, a delegation of the Chamber composed by EmilCulda, Vice-president and Ali Eden, Vice-president, participated, as lecturers, at the seminarorganized by the professional body from the Republic of Moldova, sharing with the ACAPmembers information regarding the International Standards on Auditing and the Code ofEthics. Also in 2009 the first premises were set for concluding a Memorandum ofUnderstanding between CAFR and ACAP, Memorandum of Understanding that was latersigned in Chiºinãu.


he 2009 image and communication strategy was the object of a special program,drafted according to the tasks established for this area at the previous AnnualConference and approved by the CAFR Council.

Within this program, several actions were taken to assure, on one hand, the transparency ofthe financial auditors’ activity and of the Chamber’s, as a whole, and, on the other hand, topromptly and efficiently inform the public opinion, the State institutions, the business environ-ment and the professional bodies regarding the problems, solutions, news that concern theprofession and the current and future activity. For example, based on the Memorandum ofUnderstanding with CCIR and CCIB, professional meetings were scheduled between thefinancial auditors and businessmen, managers and economic experts to assure a betterknowledge of the role and of the importance of financial audit for the business environment.

The main communication tool is the Chamber’s website, which is the fastest way to sendinformation. The Chamber’s website has also an English version, which provides the oppor-tunity to get acquainted with the Chamber’s activity for foreign persons, international profes-sional organizations such as IFAC, FEE, FIDEF, or for visitors from countries with which theChamber has concluded Memorandums of Understanding.

Considering the number of visitors, the website progressed by reference to the previousyears, maintaining itself among the first ten websites of non-governmental organizations inthe Trafic.ro top.

In order to provide the best services for the Chamber’s members, technical interventions wereperformed for updating the software running on our servers. Also, one main requirement wasto keep the website active, as it has more and more visitors.

Another very important communication and image media is represented by the Chamber’spublication, the „Financial Audit” magazine, which celebrates its 8th year of continuous publi-cation, counting 65 issues at the moment this report was completed. The magazine had aremarkable qualitative progress, obtaining in 2007 the B+ CNCSIS rating. The B+ rating wasconfirmed in 2009, even if the assessment criteria were more exigent than those used in aprevious assessment.

The scientific articles published in this magazine are included in international databases, suchas ProQuest and Ulrich’s.

The magazine is distributed free of cost to all financial auditors, in printed or electronic format,according to their option. Also, around 10% of the number of copies are distributed on a sub-scription basis (in printed or electronic format), for promotion or for publication exchange withvarious national and foreign institutions and professional bodies.

Structurally, the magazine has a section dedicated to national and foreign scientific researchcommunications, a section containing articles that connect the theoretical and practical

IV. Communication

T

aspects of audit and a section dedicated to information regarding the Chamber’s activity orthe activity of national and foreign professional bodies.

Mainly, the published articles are written by authors who are also financial auditors or belongto the academia, as well as by foreign specialists.

The magazine has its own website, which publishes the summaries of the existing issues, theabstracts, key words, the review procedure, subscription types, as well as other useful infor-mation, in Romanian and English.

The magazine is also published in electronic format, having its own ISSN.

The magazine has its own website – www.revista.cafr.ro, which presents the English andRomanian issues of the magazine, as they are published (cover, summary, abstracts, keywords). The magazine is entirely published on the Chamber’s website in a security area, sothat the Chamber’s members may choose to receive the magazine in this format.

During 2009 and the first part of 2010, the Chamber developed its relations with the mass-media, so that, currently, 25 journalists belonging to the central and local press, radio and TVstations are accredited by our professional body.

The members of the Chamber’s Council published articles or gave interviews to the writtenpress, radio and TV stations on subjects related to the Romanian audit market, to the currentchallenges generated by the economic crisis, to the profession’s adaptation to the new stan-dards imposed by the European Directives and by the respective Romanian legislation.

The press was invited to attend the Chamber’s events, such as the territorial meetings withthe auditors or the “National Day of the Romanian Financial Auditor”. The mass-media mani-fested a special interest for the second Congress of the Romanian financial auditors, whichtook place on 26 June 2009 in Cluj-Napoca, the Congress works being promoted before, dur-ing and after the event. The media partners of the Congress were: AGERPRES,„Economistul”, „Together for Your Business”, „Afacerea”, and the radio stations: RadioRomânia Actualitãþi, Radio France International and the TV stations: TVR Cluj and RealitateaTV Cluj, which granted substantial air time to report on the event; the number of central andlocal newspapers reporting on the Congress was significantly greater.

These partnerships continue to function, in order to assure the widest dissemination possibleof the information towards readers, but also to make public the concerns, problems and solu-tions brought forward by CAFR, in the circumstances of the general efforts for surpassing thecurrent economic difficulties generated by the world crisis.

Also, the Council and the Executive are closely watching the manner in which the problemsof the profession are approached in the mass-media. For this purpose, the Chamber entereda monitoring contract with the Romanian Press Agency, "Agerpres", as well as contractedsubscriptions for several central economic newspapers, to which we add the magazines edit-ed by other professional bodies with which CAFR exchanges publications.entered a monitor-ing contract with the Romanian Press Agency, „Agerpres”, as well as contracted subscriptionsfor several central economic newspapers, to which we add the magazines edited by other pro-fessional bodies with which CAFR exchanges publications.



The evolution of the Chamber’s main indicators for the past two financial years is the follow-ing:

The revenue of the Chamber from members’ fees represented in 2009 approximately 55% ofthe total, the registration and examination fees revenue approximately 23% of the total, therevenue from organized lectures approximately 8%, the interest on cash deposits represent-ed around 6% of the total, the economic activity revenue represented around 3% and otherrevenue approximately 1% of the total revenue of the Chamber.

Patrimonial and financial situation of the Chamber of FinancialAuditors of Romania

The expenses of the Chamber were destined, on one hand, to the maintenance and opera-tion of the Chamber, this representing 62% of the total, and, on the other hand, to the supportof the profession - 38% of the total. The weight of the expenses for the support of the profes-sion increased by reference to 2008, when these expenses represented only 34% of the totalexpenses. Also, by analyzing the dynamics of the expenses, it is easy to observe that theexpenses for the support of the profession increased by 25% by reference to the previousyear, whereas the operating expenses increased only by 5%, which demonstrates theincrease in 2009 of the efforts for supporting and developing the audit profession.

The patrimony of the Chamber increased by 27%, from 6.323.899 lei as of 31.12.2008 to8.044.996 lei as of 31.12.2009, mainly due to the new investments in government bonds.

The results of the 2009 financial activity of the Chamber

The Chamber’s accounts are organized and managed according to the modified and amend-ed Accountancy Law no. 82/1991 and to the Order of the Minister of Economy and Financeno. 1969/2007 on the Accounting regulations applicable by not-for-profit legal entities.

Patrimonial situation:

The accounting net assets as of 31 December 31 2009 is of 7.852.023 lei by reference to6.118.837 lei as of December 31st 2008, representing an increase of 1.733.186 lei, 28%respectively.

The structure of the accounting net assets is marked by the following developments:


- the value of fixed assets as of 31 December 2009 is of 3.044.155 lei by reference to3.063.790 lei as of 31 December 2008, representing a 1% decrease;

- the value of circulating assets as of 31 December 2009 is of 4.971.719 lei by refer-ence to 3.256.609 lei as of 31 December 2008, representing a 52% increase, which ismainly due to the increase of investments in government bonds;

- the prepayments increased from 3.500 lei in 2008, to 29.122 lei in 2009, this differ-ence appearing from the fact that in December 2009 the first issue for 2010 of the“Financial Audit” magazine was edited, printed and distributed; in order to observe thefinancial exercise independence principle, these expenses were accounted for as pre-payments;

- the debts value as of 31 December 2009 is of 176.596 lei by reference to 186.028 leias of 31 December 2008, with a 5% decrease representing only debts to current sup-pliers and paycheck obligations that were settled during January 2010;

The weight of each element in the structure of the accounting net worth is the following:

- the fixed assets have an important weight in the asset base, representing 39%,3.044.155 lei respectively. Included in the fixed assets, the property, plant and equip-ment reach at the end of 2009 of 2.987.035 lei, representing the headquarters of theChamber, furniture, office equipment and transportation vehicles etc.

- the circulating assets represent the largest part of the patrimonial elements, namely63%. Their value at the end of 2009 is of 4.971.719 lei. Included in the circulatingassets, the cash on hand and short term investments represent 96%.

- the debts represent 2.25% of the total financing sources. These represent obligationsto current suppliers and paycheck obligations that were settled during January 2010.

During 2009, the development of each element included in the structure of the account-ing net worth was the following:

- the fixed assets decreased by 1% due to depreciation expenses;

- the circulating assets increased by 52% and, included in the latter, the cash on handand the short term investments increased by 53%;

- the debts decreased by 5%, due to the fact that the paycheck obligations and the obli-gations to current suppliers for December 2009 settled in January 2010 were less sig-nificant than those from the same period of the previous year.

The financial accounting information presented in the balance sheet provide a favorableimage of the Chamber’s financial position, fact that can be observed in the high percent-age of equity (97.80% of the Chamber’s financing sources) by reference to the economicdebts (2,20% of the Chamber’s financing sources).


Message of Prof. PhD. Ion Mihãilescu, EN-69fb.pdfMessage of Prof. PhD. Ion Mihãilescu, President...

Documents

Transcript of Message of Prof. PhD. Ion Mihãilescu, EN-69fb.pdfMessage of Prof. PhD. Ion Mihãilescu, President...