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IFRS for photovoltaic parks in Romania | News Flash

June 17, 2024
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Accace - IFRS for photovoltaic parks in Romania

With the increasing demand for renewable energy sources, the development of photovoltaic parks has become a rapidly growing industry in many countries worldwide, including Romania. However, as the complexity and scale of photovoltaic projects increase, it is crucial for entities in this field to adopt and apply International Financial Reporting Standards – in short, IFRS for photovoltaic parks in Romania to ensure financial transparency and compliance with international accounting practices in preparing consolidated financial reports.

Applying IFRS in financial statement preparation

To accurately represent the assets and liabilities of companies, we recommend at least the following standards in preparing financial statements:

  1. Recognition and measurement of assets: IFRS 16 – Leases and IFRS 9 – Financial Instruments are key standards for recognizing and measuring assets used in the development of photovoltaic parks and the associated liabilities. These standards provide detailed guidance on the proper recognition and measurement of assets, including solar equipment, right of use for land, and other assets and liabilities involved in projects.
  2. Fair value measurement of assets: IFRS 13 – Fair Value Measurement is a key standard for assessing the fair value of photovoltaic assets, including accounting for the fair value of assets in accordance with market and valuation principles. This is crucial in an industry where asset values can fluctuate significantly based on technological changes, demand, and other factors.
  3. Transparent reporting of risks and contingencies: IFRS 7 – Financial Instruments: Disclosures and IAS 37 – Provisions, Contingent Liabilities and Contingent Assets are important standards for transparently reporting the risks and contingencies associated with photovoltaic projects. These standards require detailed disclosure of financial risks and contingent obligations, thus ensuring transparency and accurate information for investors and other stakeholders.
  4. Reflecting borrowing costs: IAS 23 – Borrowing Costs regulates the accounting treatment of borrowing costs, providing guidance on when and how these costs can be capitalized as part of the acquisition cost of certain assets. The proper application of IAS 23 is crucial for adhering to accounting principles and making decisions regarding the efficient management of borrowing costs within an entity’s financial context.

The importance of implementing IFRS for photovoltaic parks in Romania

Implementing International Financial Reporting Standards (IFRS) in the photovoltaic parks development business is essential for ensuring financial transparency, legal compliance, and accurate and relevant information for all stakeholders. By adopting and applying IFRS, entities in this industry can promote greater trust and credibility in their financial reporting, thereby supporting the growth and sustainable development of renewable energy.

The support provided by Accace Romania

With our presence in international markets and the experience of our experts, we offer a wide range of solutions tailored to the diverse needs of businesses. Our financial and accounting specialists provide comprehensive support in implementing IFRS for companies in the photovoltaic parks industry. We invite you to contact us to learn how we can collaborate to ensure accurate financial and accounting reporting for your organization.

Eugen Bursuc
New Business and Accounting Manager | Accace Romania
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