Proceedings

4.4. Accrual basis accounting
After 1990, the Romanian regulations consider accrual accounting as the basic
assumption when obtaining and providing accounting information. Our preference for
the international accounting standards (IAS/IFRS) confirms and supports this
approach, according to which transactions and events generate accounting revenue
and expenditure when they occur and not necessarily when cash flows are generated
(proceeds/payments). This basic concept (provided in the IASC General
Framework…) is described as such in the OMPF 3055/2009. The description of
accrual accounting may seem somewhat ambiguous (Edwards, 2003 proposes (for the
United States) to return to a cash flows tax system; Shaviro,2009). In order to
overcome this difficulty, the standard explicitly provides an important consequence of
this principle – the matching principle.
The general fiscal rule currently acknowledges the same principle, without too many
exceptions – revenue and expenditure are recognized in the same way accounting
does, that is when they are earned/undertaken and not when they are actually
received/paid. One may therefore conclude that, from the principle standpoint, both
the accounting and fiscal standards rely on the same reasoning.
The tax treatment applied to installments sales enjoyed certain specific aspects related
to profit tax. Thus, before April 30, 2005, the revenue and related expenditure became
taxable/deductible (as profit tax) on the date set for installment collection.
Consequently, a clear distinction between accounting and taxation could be revealed,
although, for simplicity reasons, some accountants recorded the accounting revenue
and related expenditure on the same date set for installment collection.
The tax recognition of the accounting independence of financial years is also
supported by the following explicit provision of the tax law: “the taxable profit is
calculated as the difference between the revenue earned from any source and the
expenditure undertaken in order to earn revenue, in a fiscal year…” One may however
notice that there are cases when the financial year of the fiscal recognition of
particular expenditure (and revenue, although less significant) differs from the
financial year when this expenditure achieves accounting recognition. Theoretically
speaking, we may include here all the differences between the taxable income and the
accounting earnings, which the international accounting standards (IAS 12 Profit Tax)
include in taxable or deductible temporary differences (see also Plesko, 2004;
Gallego, 2004; Ristea, 2008). In short, here are the possible sources of such temporary
differences:
� accounting depreciation different from tax depreciation – differences occurred
because of different amounts to be depreciated, different depreciation periods
or systems;
� depreciation adjustments and fiscally nondeductible provisions;
� interests whose deductibility is deferred until all the indebtedness and positive
equity capital requirements are met;
� nontaxable revenue from value differences of long-term equity securities.
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