To many company managers, the annual inventory looks like a year-end formality — a long list signed in a hurry before the financial statements. In reality it is the opposite: a control tool that tells you the truth about your company’s assets, protects your wealth from hidden losses and shields you from unpleasant surprises during a tax audit.
Romanian accounting law (Law no. 82/1991) requires a general inventory of assets and liabilities at least once a year, usually at the close of the financial year, before the annual financial statements are drawn up. The detailed rules for organising and carrying out the inventory are set by order of the Ministry of Finance (the reference norm being OMFP no. 2861/2009 in its applicable form). It is not optional but a legal obligation — and how you complete it makes the difference between a mere tick-box and a true picture of your business.
This guide explains, step by step, who performs the inventory, how it is conducted, how discrepancies are treated and what tax implications may arise. For investors from Germany, Austria, Italy and the Netherlands, the inventory is also the foundation of group reporting to the parent company.
Why the annual inventory is mandatory
The inventory serves a double role. The first is legal and accounting-related: it confirms the physical existence of assets and underpins the annual financial statements. A balance sheet not preceded by a proper inventory does not reflect reality and can be challenged during an audit.
The second role is managerial. The inventory shows where you are losing money without knowing it: spoiled stock, missing goods, fixed assets scrapped in practice yet still on the books, old receivables that will never be collected.
- Confirms assets — inventories, fixed assets, cash, bank balances.
- Confirms receivables and payables — through balance confirmations with partners.
- Justifies adjustments — for depreciation, stock write-downs or doubtful receivables.
- Prevents internal fraud — recurring shortages are a warning sign.
The inventory committee: appointment and composition
The inventory is carried out by committees appointed through a written decision of the administrator or the person managing the company. The decision sets the committee’s composition, the stocks to be counted, the period and the method.
The golden rule of segregation of duties: neither the storekeeper responsible for the stock nor the accountant keeping its records may sit on the committee. The reason is obvious — whoever is responsible for the goods cannot also verify that they exist. At small companies with few employees, practical arrangements are possible, but the principle that the counter is independent from the custodian remains.
The core documents
- Inventory decision — appoints the committee and sets the framework.
- Storekeeper’s declaration — given before the count begins, confirming all documents have been handed to accounting.
- Inventory lists — record the quantities physically found.
- Inventory report — the committee’s conclusions, with discrepancies and proposed solutions.
The practical steps of the inventory
A well-organised inventory follows a logical sequence:
- Preparation — issuing the decision, informing storekeepers, arranging and labelling goods, recording stock movements up to date.
- Physical count — the committee actually counts, weighs or measures the goods and enters them in the inventory lists. The count must be physical, not taken from the records.
- Comparison with the book records — actual quantities are compared with the accounting balances.
- Establishing discrepancies — surpluses (physically more than on the books) and shortages (physically less).
- Analysis and settlement — the committee examines the causes, proposes solutions, and results are booked.
For items that cannot be physically counted — bank balances, receivables, payables — the inventory is carried out by matching balances against bank statements and confirmations received from banks and partners. This step is often neglected but essential for foreign-owned companies reporting to a parent: an overstated receivable distorts the consolidated result.
Surpluses and shortages: how to treat them correctly
Discrepancies are never left unexplained. Every surplus or shortage must be analysed, justified and recorded:
| Situation | Meaning | Treatment |
|---|---|---|
| Inventory surplus | Physically more than on the books | Recorded as an inflow; investigate the cause (unrecorded receipts, measurement errors). |
| Shortage within norms | Normal losses (natural wastage) within legal limits | May be booked as an expense under the conditions and limits set by law. |
| Shortage over norm / unjustified | Missing quantity outside allowable wastage | Charged to the responsible custodian; may carry tax implications (VAT, tax). |
| Impairments | Damaged, hard-to-sell goods | Impairment adjustments are recognised. |
This is the tax-sensitive part. An unjustified shortage of goods may be treated by the tax authority as a deemed supply or a missing asset, with consequences for previously deducted VAT (adjustment/charge) and for the deductibility of the expense under corporate income tax. Natural wastage is accepted for tax purposes only within legal limits and only when actually found at the inventory. Our advice: document every discrepancy with a report and a settlement decision. Because the treatment depends on the specific cause, this is an area where it pays to consult a chartered accountant before booking.
Timing and best practice
Although the law allows the inventory to be performed during the year (with adjustments at year-end), most companies concentrate the general inventory before closing the balance sheet. A few practical recommendations:
- Do not leave everything for the last day — for large stocks, plan the count over several days.
- Clean up the records first: post all receipts and issues up to date.
- Keep inventory lists signed by all committee members and the storekeeper.
- Confirm balances with partners early — confirmations take time to return.
- Document decisions on scrapping, impairments and charges.
For foreign investors, the inventory also has a group dimension: results must be reconciled with the parent company’s reporting requirements and any differences between local and group standards. Here, coordination between the Romanian accountant and the group saves time and avoids errors.
Conclusion
The annual inventory is not a formality but the moment you learn the truth about your company’s assets. Done properly, it protects your wealth, underpins a solid balance sheet and shields you from tax risk. Done carelessly, it hides problems that surface exactly when you least expect them — during an audit.
If you want your company’s inventory to be flawlessly organised and discrepancies treated correctly for tax, the Conta Fiscal team in Cluj-Napoca can guide you from the inventory decision through to the accounting entries. Get in touch for a discussion tailored to your situation.
Frequently asked questions
Is the annual inventory mandatory for all companies?
Yes. Romanian accounting law requires a general inventory of assets and liabilities at least once a year, before the annual financial statements are prepared, regardless of company size.
Who may be part of the inventory committee?
The committee is appointed by written decision of the administrator. Neither the storekeeper responsible for the stock nor the accountant keeping its records should be members, to preserve the independence of the check.
What happens with an unjustified inventory shortage?
A shortage that falls outside the allowable natural wastage is charged to the responsible person and may carry tax implications, such as adjusting deducted VAT and the non-deductibility of the expense under corporate income tax.
How are receivables and payables inventoried?
By matching the accounting balances against bank statements and balance confirmations received from partners. This is the step that validates the receivables and payables in the balance sheet.
Can I book stock losses as an expense?
Natural wastage may be booked as an expense only within the limits set by law and only when actually found at the inventory. Check the limits in force, as they may change.