Chamber of Financial Auditors of Romania ANA DINCĂ CAFR First Vicepresident Experience of Regulation based on ISAs and the Code of Ethics 1 July – 3 July CAFR and the Implementation of International Standards on Auditing (ISAs)

The Chamber of Financial Auditors of Romania The CAFR was established by the Government Emergency Ordinance no. 75/1999. The Chamber began functioning effectively in 2000, as a self-financing body. As of 31 December 2013, the CAFR registers approximately: financial auditors (individuals); audit firms (legal entities); trainees in financial audit. The head-office is in Bucharest, with three regional offices in Iaşi, Braşov and Cluj. CAFR has signed cooperation agreements with 11 professional institutes and is a member of the following international bodies: 2 1

CAFR - member of international professional organizations CAFR is a full member of the International Federation of Francophone Accountants (FIDEF) – since May 6, 2006 CAFR is a full member of the International Federation of Accountants (IFAC) – since November 13,

CAFR - member of international professional organizations CAFR is a full member of the European Federation of Accountants (FEE) – since December 16, 2010 CAFR is an institutional member of the International Association for Accounting Education and Research (IAAER) – since April 17,

Experience and regulation based on ISAs and the Code of Ethics 5 4 Starting with 2000, the year of its establishment, CAFR has implemented the International Standards on Auditing (ISAs) and the IFAC Code of Ethics. In Romania, ISAs’ application is mandatory for all financial audit engagements carried out by CAFR members. ISAs implementation is also one of the 7 Statements of Membership Obligations (SMOs) that the Chamber assumed to observe, in its capacity of IFAC full member. In the quality assurance reviews performed by the Chamber, the ISAs practice is reviewed by the quality reviewers (employees of the CAFR Monitoring and Professional Competence Department).

Experience and regulation based on ISAs and the Code of Ethics 6 5 The Institute of Chartered Accountants of Scotland (ICAS) supported the Chamber in the process of ISAs implementation, by experience sharing and providing us with methodology and best practices. ISAs are included in the examination curricula for obtaining the financial auditor qualification, as well as in the continuous professional development curricula. The knowledge of the international standards’ implementation is also promoted by articles published in the two professional journals issued by the Chamber: “Financial Audit” and “Audit Practices”.

Experience and regulation based on ISAs and the Code of Ethics 7 6 The ISAs were implemented in Romania as such, with no changes or alterations. The Chamber organizes yearly training courses for the trainees in financial audit activity and for the financial auditors, CAFR members. Starting with 2010, CAFR has translated and published the Guide on Quality Audit, developed by the Institute of Chartered Accountants of Scotland (ICAS) and adapted to the Romanian legal provisions. This Guide refers to the ISAs application in audit engagements. In 2012, the updated version of the Guide on Quality Audit was published, reflecting the practical application of the Clarified International Standards on Auditing.

Experience and regulation based on ISAs and the Code of Ethics 8 7 Ever since 2000, the Chamber of Financial Auditors of Romania translated and published into Romanian language the Handbook of International Standards & Pronouncements, under IFAC copyright. Until now, six editions of the IFAC Handbook were published: 2000, 2003, 2006, 2008, 2009 and It was only recently, in April 2013, that the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements was published by the CAFR, in Romanian.

Experience and regulation based on ISAs and the Code of Ethics Using a single set of audit standards will continue to increase audit quality and the credibility, comparability and consistency of financial statements in different jurisdictions. ISAs implementation will improve auditors’ cross-border mobility and will decrease costs and deficiencies registered in the transnational audit engagements. Recognizing ISAs implementation importance in strengthening the confidence on the market, of the investors and other interested parties, CAFR supports the adoption of the International Standards on Auditing. 9 8

Audit Policy On 13 October 2010, the European Commission issued the “Green Paper on Audit Policy: Lessons from the Crisis”. The Green Paper depicted the role played by auditors in offering an opinion on the truth and fairness of financial statements of audited entities. On 30 November 2011, the European Commission released its Proposal review of the Statutory Audit Directive(SAD) 2006/43/EC applicable to all statutory audits within the EU and the Regulation applicable only to statutory audit of P.I.E S. After nearly three years of discussions, the final Directive and Regulation became EU legislation and were published in the Official Jurnal of the EU on 27 May

Audit Policy In 2 years, Member States need to transpose the new provisions into national law. The main objectives of this reform are to: Clarify and define more precisely the role of the auditor; Reinforce the independence and professional scepticism of the auditor; Make the top end of the market more dynamic; Improve the supervision of auditors; Facilitate the cross-border provision of statutory audit services; and; Reduce unnecessary borders for SME S; CAFR will promote these regulations among auditors, being concerned by their transposition into national law

CAFR position CAFR supports the existence of a tripartite communication: regulatory authority – auditor – audited entity. CAFR favors the development of SMEs. CAFR suggests the implementation of the IFAC Code of Ethics, comprising solutions to the issues of independence and conflicts of interests. CAFR welcomes a better understanding of cultural differences and a better institutional cooperation, by means of a dialogue at all levels: standard-setters, oversight authorities, business community, professional accountancy bodies, governments, academia, small, medium and large firms. 12 1

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Chamber of Financial Auditors of Romania 14 Thank you for your attention! ANA DINCĂ CAFR First Vicepresident