Moldovan cabinet adopts new law on accountancy

Chisinau, 08 June /MOLDPRES/ – The scope of accounting will be regulated by a new law, updated and aligned with the European legislation provisions in the field of corporate financial reporting. The document was approved at the Cabinet of Ministers’ meeting today, the government’s communication and protocol department has reported. 

The draft Law on Accounting aims to establish the legal framework, the general requirements and the mechanism for regulating the accounting and financial reporting in Moldova.

The new law will also cover the permanent representations of non-resident entities and individuals who are self-employed as a result of changes in tax legislation, in addition to the entities provided by the current one. Also, the budget financed public institutions, the accounting and financial reporting of which are to be regulated by the Law on Public Finances, were excluded. Thus, only the public authorities and institutions of self-management will be obliged to continue to apply the provisions of the Accounting Law.

The criteria for classifying entities and groups (micro, small, middle and large) were also updated, redefined public interest entities and specified accounting and financial reporting requirements for them.

The draft law provides for the application of three sets of financial statements (abbreviated, simplified, complete), depending on the category and the information needs of the entities applying the National Accounting Standards. For detailing financial statement items and disclosing additional info not included in the financial statements and in the notes thereto, entities will prepare the explanatory note. The middle, large and public interest entities will be required to prepare, together with the financial statements or a management report. The document also requires that the basic entity (which controls one or more ones) should prepare consolidated financial statements.

As for financial statements’ audit, the draft law requires to be achieved in the case of middle and large, public interest entities and other entities as required by the legislation in force, but also in the case of consolidated financial statements of the groups required to prepare them by the draft law.

The document also includes news about the publication of the individual financial statements, the management and the audit reports are to be sent by electronic mail or uploaded to the system of the Public Financial Statements Depositary. In this way, more information users will be available. It will also be mandatory to publish on the entity’s website all the financial statements, the management report and the audit report of the entities subject to the mandatory audit.

Additionally to transposing the requirements of the European directives in the field, the concepts of accounting and financial reporting were updated in the draft Law on Accounting; clear requirements were set for primary documents and accounting records; requirements for the persons in charge for accounting and financial reporting within the entity; provisions regarding the responsibility of the members of the board, executive and supervisory bodies in relation to the financial statements; clarifications as to the entity management period for which it differs from the calendar year or in case of its reorganization or liquidation.

The new law implementation requires the state budget spending to develop and bring into line with the draft law on National Accounting Standards and the Depository of Financial Statements platform development.