Exercise of Professional Judgment on Correcting Accounting Errors

Author:Associate Prof. Daniel BOTEZ, Ph. D.

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Keywords:IAS 8, errors, 4th Directive of EEC, the principle of inviolability of balance open, retrospective restatement

Abstract:
For several years, professional accountants in Romania apply successive accounting rules, arising from the reform process of Romanian accounting system. Accession to the European Union emphasized the process, leading to accounting regulations consistent with European directives. In their accounting treatment is also normalized the correction of errors. International referential on error correction is IAS 8 „Accounting Policies, Changes in accounting estimates and errors”. The treatment provided by this standard is in contradiction with the provisions of referential Regional EU 4th Directive. \r\nRomanian accounting regulations seek a solution for the conciliation of the two standards, with manifest accent in favor of the treatment prescribed by IAS 8. \r\nThus, in Romania, error correction of the previous periods is carried out on behalf of retained earnings. Only minor errors are allowed to be corrected on behalf of the current account result. Delineation errors as significant or insignificant by applying the principle of materiality is a right and an obligation for accounting professionals. \r\nErrors may be caused by many circumstances, of which this paper remember those related to errors in transactions recording, due to their repetitive nature and to use of computer software, to mathematical calculation errors, to disregard of existing situations on the closing date of the financial year or to the resolution of fraud cases. A specific situation is correcting errors as tax differences and their related tax debts, established by the control acts of tax inspections. \r\nThe nature of these errors involve the use of professional judgments, both for financial reporting and for determining, in some cases, the amount of correction, leading to a permanent casuistry open to professional values application.\r\n

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