The USV Annals of Economics and Public Administration, Vol 15, No 3 (2015)

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POLICIES AND PRACTICES FOR IMPLEMENTATION OF IFRS AND NAS IN THE REPUBLIC OF MOLDOVA

LICA ERHAN, MARIAN SOCOLIUC, SVETLANA MIHAILA, VERONICA GROSU

Abstract


This study aims to analyse the process of harmonization of national accounting standards of the Republic of Moldova to the international standards. It highlights the main advantages, disadvantages, risks and opportunities regarding the implementation of the new standards. A major step for the Republic of Moldova was the implementation of IFRS, which has become mandatory for all public interest entities from 1 January 2012 and the adoption of new NAS in accordance with EU Directives and IFRS for small and medium-sized entities, for which the transition to IFRS was difficult due to high costs involved. The new NAS came into force on 1 January 2014 as a recommendation, but starting with 1st January 2015 it will be mandatory for all entities. The paper includes a practical analysis of the impact of transition to IFRS on the financial results of a public interest entity- Moldova Agroindbank, which is the largest commercial bank, with the highest market share in the banking sector of the Republic of Moldova. A result of the analysis of primary and secondary indicators calculated on the base of the financial statements prepared by commercial bank at 31.12.11, we found that the transition to IFRS has resulted in the growth of all financial indicators. Thus, it led to the increase of the bank assets, liabilities, equity value and obligations. Under IFRS, the weight of equity in total bank liabilities has increased, but the weight of obligations has decreased. Implementation of IFRS resulted in the increase of the net profit, which contributed to strengthen the stability of the bank on the market. Simultaneously, the liquidity ratio, solvency and global financial autonomy rate have increased and indebtedness has decreased which is considered positive. By the light of the analysis of the impact of transition to IFRS can be concluded that the connection to the new standards had a beneficial impact on the bank, maximizing its market value, increasing investors, customers, business partners’ confidence and contributing to the reduction of risks.


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                     Ştefan cel Mare University of Suceava                   Faculty of Economics and Public Administration
 

 

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