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15 14 December 2012

ROMANIA Inventory 31.12.2012

REFERENCES: Law 82/1991; OMF 2861/2009; OMF 3512/2008

Annual Inventory of Patrimony

According to Accountancy Law 82/1991 and Order 2861/2009, all companies are required to perform general inventory of property at least once a year, usually at the end of the year. The companies with complex activities may carry out the inventory before the financial year closing, on the condition that the results of the inventory are included in the financial statements of that fiscal year. The manager of the company is responsible for good planning and supervising of inventory. In order to organize the inventory, the manager approves written procedures adapted to the activity of the company, and transmits them to inventory committees. The inventory ventory is carried out by committees consisting of at least two persons appointed by a written decision (Annex 1) issued by the administrator or director of the company. The members of the committee, the responsible of the committee, the method applied for inventory, the warehouses to be inventoried, the beginning and the closing date of the inventory are mandatory elements that have to be mentioned in the decision. In Appendix 1 is presented a template to be adapted and customized for each company. In case of small companies, the inventory may be carried out by one person. Responsibles of warehouses subjects of inventory, the accountants and the internal auditors cannot be members of the inventory committee, except for small companies. However, through internal procedures, the entities may agree that the accountants may participate, but without being a member of the committee. If the entities have no employee to perform the inventory, it will be carried out by administrators. Inventory and valuation of assets, liabilities and equity may be performed both by the employees or based on service contracts concluded with legal entities or individuals with economic and/or technique training. Before starting the inventory, the warehouse responsible must provide a written statement (Annex 2) to indicate if:




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he also manages goods in other warehouses; he also manages goods belonging to third parties, received with or without documents; he is aware of quantitative or value surplus or missing goods in the warehouse; he has goods without entry documentation or goods that have to be delivered for which relevant documents have been prepared; he has received or delivered goods without legal documents; he owns cash, cheques or other securities after sale of goods from his warehouse; he has documents for reception/delivery of goods not registered in the warehouse records or not handed over to the bookkeeping. In addition, the warehouse responsible will mention in the written statement the type, the number and date of the last document of reception/delivery of goods. On the last page of the inventory list, the warehouse responsible must specify if all material and financial values have been identified and recorded in the inventory lists in his presence. He also mentions if he has objections regarding the inventory. Inventory lists will be signed on each page by members of the inventory committee and by the warehouse responsible. All goods subject to inventory shall be recorded in the inventory lists (Annex 3) that have to be prepared by locations, by warehouses and by categories of goods. The inventory by using the electronic identification methods (for example barcode reader) is allowed. FIXED ASSETS Inventory of the intangible assets is done by determining their existence and confirming the company as their owner; for patents, licenses, trademarks and other intangible assets it is necessary to prove their existence by legal documents. Inventory of land is based on documents proving their ownership right and other legal documents. Buildings are inventoried by identifying them based on property titles and their technical file. Construction and special equipment such as electricity networks, gas, water, sewerage, telecommunications, railways and others similar are inventoried according to the rules set by their owners. Fixed assets, which are outside of the entity premises in the period of inventory, will be inventoried before leaving the company or by written confirmation from the entity where they are stored, according to the approved procedures. For the fixed assets in progress the inventory lists have to mention, for each item, based on finding in the field: the name and the value determined according to the stage of completion, based on the value of existing documentation (estimates) and also by the volume of work completed at the inventory date. Materials and equipment received from clients and not
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assembled into the works are inventoried in separate lists. Investments put into operation in whole or in part without documentation as fixed assets are inventoried in separate lists. Also, investments in progress that are no longer in execution, being suspended or abandoned, are entered into separate inventory lists, specifying the causes of termination or abandonment, the decision to suspend or to abandon the investments and the necessary measures to be taken regarding these works. STOCKS The inventory of physical stocks is made by counting, weighing, measuring or evaluation, as appropriate. If these processes cannot be used to identify them, the stocks are inventoried based on technical calculations. Stock Inventory has to be carried out also for fiscal documents with special regime. Goods belonging to other companies (rented, leased, in custody, for processing, etc) are inventoried and recorded in distinct lists that will be sent for confirmation to the owners of the goods. Inventory lists for goods in custody will contain information regarding number and date of custody document, of delivery document, as well as other useful information. The entities having the goods in custody are required to carry out the inventory and to send the lists for confirmation to the owners; owners of these assets are required to ask for confirmation of existing assets to third parties. Failure to receive confirmation of existing assets from third parties is not a tacit confirmation. Leasing companies have to request the lessees to provide the inventory lists with the goods subject of leasing contracts. RECEIVABLES AND LIABILITIES Receivables and liabilities against third parties are subject to verification and confirmation, based on debtor and creditor extracts for receivables and payables accounts that have significant amounts (Annex 4). It is appropriate that, during the inventory procedure, the confirmation of balances to be made by letters sent with delivery receipt. Failure to follow procedure and refusal to confirm are deviations from these rules and are sanctioned by law. Companies are therefore obliged to make any necessary effort to obtain confirmations. The tacit confirmations for receivables and liabilities are no longer accepted, either. LIQUID ASSETS The liquid assets of bank accounts must be inventoried comparing the balances of the bank statements, sent by the banks, and the balances registered in accountancy (Annex 5). The inventory of the liquid assets, in lei and in foreign currency, in petty cash, must be carried out in the last working day of the fiscal year, after the registration of all the receipt and payment operations of that fiscal year, confronting the balances of the cash register and the balances of bookkeeping. EVALUATION AND DEPRECIATION During the inventory, the evaluation of assets and liabilities is made according to accountancy regulations as well as the provision of Order 2861/2009.

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Evaluation should be made observing the consistency principle: the company applies consistently the same rules and standards, ensuring the comparability over time of the accounting information presented. The tangible assets for which adjustments for depreciation or decreased value are booked, shall be recorded in inventory lists with the book values less the adjustments, that have to be compared with the value at the inventory moment, based on actual findings. In calculating the inventory value of the goods, the prudence principle should be observed, by analyzing possible adjustments for depreciation or decreased values. REVALUATION OF FIXED ASSETS We remind you that companies may proceed to revaluate the fixed assets in order to reflect their market value in the annual financial statements. The revaluation is made usually by qualified professionals, members of a professional specialised body. The results of the inventory should be recorded in the final report prepared by the committee, after receiving the confirmation of the balances from the accountancy. The final report (Annex 6) should indicate the following minimum information: date of report; names of members of the inventory committee; date and number of decision for appointing the committee members; the warehouse inventoried; date of beginning and end of inventory; the inventory results; the committees conclusions and advises regarding the surplus and losses as well as the liable persons; volume of depreciated stocks; proposals for discarding small inventory objects or stocks; other observations regarding the goods. For assets for which depreciation has been observed, based on distinctive inventory lists, the committee makes suggestions for adjustments for depreciation or for loss of value, or the registration of additional depreciation if applicable. FINAL REPORT The inventory committee will request written explanations from the responsible persons for the surplus or loss resulting from inventory, or damages resulting from expiry date of receivables or other causes. The losses resulted after inventory could be solved : by imputation to the responsible person, at the cost value; by offsetting with an eventual surplus, under the following conditions: - a risk of confusion it is possible to occur between various assortments of goods, due to the resemblance regarding colour, design, model, dimensions, package etc; - the loss and the surplus concern the same period and the same warehouse. The suggestions of the inventory committee are presented to the administrator of the company within 7 days from the end of the inventory. The administrator, together with the accountancy manager and the legal manager decide on the suggestions. The inventory results should be booked in the accountancy within 7 days from the date of administrators approval of final report.
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We remind you that annual inventory is not an obligation of Boscolo&Partners office. We remain at your disposal for any clarifications and details regarding the inventory procedure. CONCLUSIONS In order to apply the provisions of accountancy law 82/1991 and accountancy regulations, for annual financial statements we need to receive the inventory results as soon as the final report is approved by the administrator, but not later than 31.01.2013. In the absence of the final report, our office cannot take responsibility for closing the annual financial statements.

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