Some Elements on the Origin and Content of Romanian Accounting Reporting Obligations in Related Party Transactions

Abstract

There are two broad approaches in the literature on related party transactions (RPT). On the one hand, they are considered to represent a risk of misappropriation of funds to the detriment of shareholders, especially minority shareholders, due to the fact that these transactions are not carried out on market terms. On the other hand, such transactions are considered to simplify and streamline the work of some entities. Either way, accounting standard setters, as well as regional or global organizations, set special reporting obligations for firms involved in related party transactions. In Romania, in the national accounting rules, these reporting obligations are taken as such from the European Directive 34/2013 and are inspired, at the same time, from the international standard IAS 24. We can classify the reporting obligations in the case of related parties into two broad categories. First, there are obligations to disclose the transactions in the notes for all types of transactions, regardless of the nature of the related parties. Secondly, for the components of a group, there are obligations to prepare consolidated financial statements by following specific procedures; the latter obligations are, however, limited by the fulfillment of certain size requirements by the groups concerned. CZU: 657.375.6:657.423.2(498); JEL: M41