Internal Audit in Romania

What does the internal audit procedure involve in a Romanian company?

Audit refers to obtaining and evaluating evidence with respect to certain information in order to objectively examine, establish and compare the compatibility of this information with predetermined criteria. Thus, as we can deduce from this definition, it is necessary in a first stage to have certain information in a form that allows verification, but also specific criteria or standards that will represent the basis of the assessment made by the auditor.
 
Within the company, the internal audit is an independent activity, especially objective, which guarantees it the control over the activities carried out, coordinating and offering the means to improve the operations underlying its object of activity. In this way, the internal audit contributes to the achievement of the objectives by the company and carries out a systematic analysis of the risk management processes so that the management of the company can reach the maximum level of effectiveness.
 
Last but not least, internal audit is a form of prevention of the state of insolvency of the company in which it is undertaken.
 
By who is carrying out the internal audit procedure in a Romanian company according to the relevant legislation?

Internal auditing can be done either by people inside the company in which the internal audit procedure is carried out or outside it, being a means of control or verification more thorough than that done by auditors.
 
The internal audit activity is regulated by the Emergency Ordinance no. 75/1999, issued by the Government of Romania and republished in 2003. According to the provisions of this GEO, the financial auditors, natural persons or legal persons who have obtained this position and are members of the Chamber of Financial Auditors of Romania, may freely independently, and the internal auditor profession.
 
Auditors are appointed by law enforcement officers and, like censors, are the means of alerting themselves to a management or defective management of the company. In the case of joint stock companies, the appointment of financial auditors falls within the competence of the general meeting of the shareholders.
 
The Emergency Ordinance which represents the framework law of the audit activity in Romania establishes that the persons authorized to organize the internal audit activity, to coordinate the works and to sign the internal audit reports must hold the quality of financial auditor. In addition, financial auditors perform the function of financial auditor and evaluate the internal audit function in order to determine the extent to which the latter may be the basis for the conduct of their financial audit.
 
What types of companies are subject to the statutory audit obligation under the provisions of the Romanian law in this area?

Joint Stock Companies wishing to opt for the dualistic management system, in accordance with the provisions of Law no. 31/1990 on companies, will be subject to financial audit. In this respect, joint-stock companies whose financial statements are legally subject to the financial auditing obligation also have the obligation to organize the internal audit in accordance with the provisions of the Chamber of Financial Auditors in Romania.
 
The financial statements of the companies legally bound to the audit procedure will be audited by financial auditors, natural persons or legal entities under the conditions established by Romanian law.
 
However, in the case of joint stock companies whose economic activities are subject to financial audit, there is a legal possibility not to apply the provisions regarding the holding of a number of 3 censors, this decision being to be adopted by the general shareholders' meeting.
 
In situations where a company's financial statements are not subject to a financial auditing obligation, the ordinary general meeting of shareholders may decide to establish the financial audit or the appointment of auditors. It is useful, however, to know that the provisions of the Romanian law do not prohibit a company from opting both for the establishment of the audit and for the appointment of auditors, but it is considered that this would only complicate the easy, the activity of the company.

Financial audit and internal audit activities represent a natural step in certain types of companies set up and registered in Romania, as well as a legal option for other categories of companies, representing, equally, an important aspect within the company's activity Darie, Manea & Associates lawyers. Our lawyers specialized in commercial law can provide specialized legal assistance and representation before competent authorities in the framework of the audit procedure carried out in accordance with the provisions of the Romanian law. Do not hesitate to contact us for more information!