Financial reporting and auditingrequirements in Romania are currently in transition, fromcompliance with national standards, to compliance withInternational Accounting Standards (IAS), InternationalStandards on Auditing (ISA), and the European Union (EU)Directives. Romania's legal framework seeks to attainmaximum compliance with the EU Fourth and SeventhDirectives, and the EU regulation on the use of IAS, as wellas to create an environment for gradual implementation ofIAS for both the legal entity and the consolidated financialstatements by 2005. In practice however, the imposition ofcomplex IAS has been delayed, and currently, compliance isnot effectively enforced. Likewise, Romania seeks to attaincompliance with the EU Eighth directive and ISA; however,serious practical problems exist due to the currentout-dated translation of ISA. This report builds on recentinternational experience in developed economies, andaccession countries, as well as on expected amendments to EUdirectives, and recommends that the current self-regulationof the audit profession should be reviewed, and an adequateoversight mechanism established.