Crossing the Audit Threshold: The Statutory Audit Obligation and the Financial Structure of Romanian Agricultural Firms, 2010–2024

Authors

• Bernadett-Renata ONCEA (KASA) — Doctoral School "Eugeniu Carada", Faculty of Economics and Business Administration, University of Craiova, Romania

Abstract

The statutory audit obligation in Romania is triggered by size criteria that firms cross in both directions as they grow and contract, which produces within-firm variation in audit status. We ask what changes in the financial structure of agricultural firms when they become subject to audit, and whether the change can be attributed to audit itself. A hand-collected panel of 186 agricultural firms from 37 counties, observed over the fifteen financial years 2010 to 2024 and yielding 2,522 usable firm-year observations, is used to reconstruct the obligation year by year from the limits in force. The panel records 155 entries into the obligation, 48 exits and 38 firms crossing in both directions. Two-way fixed-effects regressions with standard errors clustered by firm, and an event study around the first entry, are estimated on winsorised ratios. Becoming subject to audit is associated with an increase of 0.0112 in return on assets, significant only at the 10 per cent level, and an increase of 0.185 in asset turnover, significant at the 1 per cent level, while leverage and the current ratio do not change. Around the first entry, apparent reductions in leverage and gains in liquidity vanish once year effects are included, which identifies them as sector-wide trend rather than a consequence of crossing. The pattern is more plausibly a mechanical consequence of how the criteria are built than an effect of audit. We document a policy discontinuity not previously described for Romanian agriculture and set out what a causal reading would require.

Keywords: size criteria; mandatory assurance; panel data; event study; liquidity

Download PDF

Cite this article

APA: Bernadett-Renata ONCEA (KASA) (2026). Crossing the Audit Threshold: The Statutory Audit Obligation and the Financial Structure of Romanian Agricultural Firms, 2010–2024. Internal Auditing & Risk Management, Vol. 21, No. 1S, pp. 41-58. https://doi.org/10.67276/ru6jgnmu4n

BibTeX:

@article{bernadettrenataonceakasa2026543,
  title = {Crossing the Audit Threshold: The Statutory Audit Obligation and the Financial Structure of Romanian Agricultural Firms, 2010–2024},
  author = {Bernadett-Renata ONCEA (KASA)},
  journal = {Internal Auditing & Risk Management},
  year = {2026},
  volume = {21},
  pages = {41--58},
  doi = {10.67276/ru6jgnmu4n}
}

Download RIS

Back to archive