Changes to the accounting regulations: OMF no. 4291/2022

The takeaway 

Minister of Finance (OMF) Order no. 4291/2022 introduced new changes and additions to the accounting regulations in the following normative acts:

• Accounting regulations regarding individual annual financial statements and consolidated annual financial statements, approved by Minister of Public Finance (OMFP) Order no. 1802/2014;

• The accounting regulations in accordance with the International Financial Reporting Standards, approved by the Minister of Public Finance Order no. 2844/2016;

• The accounting regulations for legal entities without patrimonial purpose, from annex no. 1 of the Minister of Public Finance Order no. 3103/2017.

The new changes and additions apply starting with the annual financial statements related to 2022. Economic operators with a financial year other than the calendar year apply the changes and additions starting with the first annual financial statements concluded on a date after 1 January 2023.

In detail

We present below the main changes and additions made to the accounting regulations regarding individual annual financial statements and consolidated annual financial statements, approved by Minister of Public Finance Order no. 1802/2014:

• Additions are made regarding assets with a long manufacturing cycle. Specifically, borrowing costs will not be capitalised during extended periods in which economic operators are not actually working on the realisation of the asset with a long manufacturing cycle. During extended periods when the activities necessary to prepare an asset for use or sale are interrupted, economic operators bear the costs of borrowing. During periods when significant technical and administrative work is being carried out or when a temporary delay is a necessary part of the process of preparing an asset for use or sale, economic operators will capitalise the costs of borrowing. The provisions apply starting with the annual financial statements related to the year 2022 if the effect of the change in the accounting policy can be established by the date when the respective annual financial statements are authorised for issuance. Otherwise, the provisions apply to the borrowing costs borne by economic operators in relation to loans contracted after 1 January 2023.

• Paragraph 81 of OMFP no. 1802/2014 provided: “When the application of point 80 (referring to the costs of borrowing attributable to assets with a long manufacturing cycle) constitutes a change in the accounting policy, the entity applies the provisions of that point for the costs of borrowing related to assets with a long manufacturing cycle for which the capitalization start date is after 1 January 2015.”

• Additions have been made regarding the costs incurred in connection with the construction of a tangible asset and directly attributable to it. Thus, for capitalisation, expenses incurred from design and obtaining authorisations must be recorded based on the supporting documents attesting their performance in relation to the asset in question.

• The amounts to be recorded in the “419 - Customers - creditors” account have been clarified. Thus, on the date of collection of an advance from a customer before a good or service is transferred to them, the economic operator will record a debt to the customer and highlight it in account 419 “Customers – creditors”. The economic operator removes the debt and recognises income when the respective goods or services are transferred and, therefore, the contractual obligation is fulfilled.

• The amounts recorded in account 472 “Income recorded in advance” have been clarified. More precisely, if the economic operator charged the customer a non-refundable advance (such as activation fees for telecommunications contracts, set-up fees for certain service contracts or initial fees for some supply contracts), and the amount refers to the provision of a future service, it is indicated in account 472 − “Income recorded in advance”. It is to be recognised as income when the respective services are rendered. If the advance does not refer to future services, the amount collected from the customer is recognised in the income for the respective period.

• Regulations have been included for the registration of dividends for economic operators that receive dividends during the financial year. Those operators have to highlight the amounts in the debit of account 461 − “Miscellaneous Debtors”/ separate analytical, by increasing the liabilities in account 467 − “Liabilities related to interim dividend distributions”. The regularisation of the amounts is carried out on account of the dividends due based on the approved annual financial statements of the economic operator which opted for the interim distribution of dividends.

• Additions have been brought regarding the recognition of income in situations where an economic operator acts in its own name and examples of indicators that can support this fact. Briefly, the following non-limiting examples have been included:

  • The economic operator is primarily responsible for fulfilling the contract.

  • The economic operator has a stock risk before or after the specified goods have been transferred to a customer.

  • The economic operator has the freedom to set the price for the specified good or service.

If another economic operator assumes the performance obligations, the rights provided for in the contract and the obligation to transfer the contracted good or service to the client (i.e. no longer acts in its own name), the economic operator does not have to recognise income, but it will have to determine whether it acts in the capacity of the intermediary and recognize the related income accordingly.

• A new category has been added: “Assignment by license contract of intellectual property”, after subsection 4.17.1 − “Revenues”, which provides that the licence establishes the rights of a customer regarding the intellectual property of an economic operator. Intellectual property licences may include, but are not limited to, any of the following:

  • Computer programs and technology;

  • Movies, music and other forms of media and entertainment;

  • Franchises;

  • Patents, trademarks and copyrights.

The contract will identify the obligations to grant the licence or licences, in addition to other contracted goods or services. If they are not highlighted separately, the granting of the licence and the goods or services are accounted for together, as a single operation.

The following are examples of licences that are not distinct from other contracted goods or services:

• Licence that constitutes a component of a tangible asset and that is essential for the functionality of the asset;

• Licence that the customer can benefit from only by using it together with a related service.

If the licence is distinct from the other goods or services contracted and is a separate performance obligation, the economic operator determines whether the licence is transferred to the customer at a given moment or over time. That is assessed by analysing and accounting differently for the income corresponding to the granting of the licence depending on the type of obligation to grant the licence: right to access its intellectual property or to use its intellectual property.

Royalties on the basis of sales or on the basis of promised use in exchange for an intellectual property licence are recognised by economic operators only when the latter of the following events occurs:

• further sale or use takes place; and

• the performance obligation to which part or all of the sales-based or usage-based royalty was allocated has been fulfilled (or partially fulfilled).

• A series of new accounts have been introduced in the general chart of accounts: 467 − “Liabilities related to interim dividend distributions”, 6053 − “Expenses regarding the consumption of natural gas”, 6058 − “Expenses with other utilities”, 694 − “Expenses with profit tax resulting from settlements within the fiscal group in the field of profit tax” and 794 − “Revenues from the profit tax resulting from settlements within the fiscal group in the field of profit tax”, and group 79 −  “Revenues from the profit tax”.

• The name of group 60 has been changed to: “Expenses regarding stocks and other consumption”. Account 605 has been changed to: “Expenses regarding utilities”.

• The functions of the newly introduced accounts are mentioned.

Source: [Minister of Finance Order no. 4291/2022 for the regulation of some accounting aspects, published in the Official Gazette no. 18 dated 6 January 2023]