Cambodia

Member Organizations

Member Organization Associate Other PAOs

  Kampuchea Institute of Certified Public Accountants and Auditors

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    The 2005 Law on Commercial Enterprises stipulates that all companies in Cambodia must keep accounting records. In January 2016, Cambodia’s National Assembly passed the Law on Accounting and Auditing, which replaced the 2002 Law on Corporate Accounts, Their Audit and the Accounting Profession. The new law overhauled the regulation of the accountancy profession, and established a clarified legal framework for promulgating accounting and auditing standards.

    The Law on Accounting and Auditing authorizes the National Accounting Council (NAC), established by the Law on Corporate Accounts, their Audit and the Accounting Profession in 2002, to propose and update applicable accounting and auditing standards that are consistent with international standards as issued by the IASB and the IAASB, respectively. The Ministry of Economy and Finance (MEF) subsequently approves the proposed standards by issuing a proclamation (“praka”). These standards must be applied by public institutions, enterprises, and not-for profit entities.

    The Cambodian Accounting Standards Board of the NAC fully adopted IFRS as issued by the IASB and without modifications as the Cambodian International Financial Reporting Standard (CIFRS) and IFRS for Small- and Medium-sized Entities (SMEs) as Cambodian International Financial Reporting Standards for SMEs (CIFRS for SMEs). The MEF approved the standards for application in the jurisdiction through Prakas No. 068 MEF/BK and No. 097/09 MF-NAC. Public interest entities (PIEs) such as listed companies, banks, microfinance institutions, and insurance companies as well as large private companies are required to apply CIFRS in the preparation of their financial statements. All SMEs and non-PIEs are permitted to use the CIFRS for SMEs or full IFRS. SMEs that may be subject to a statutory audit, as explained below, are mandated to use the CIFRS for SMEs.

    Additionally, the regulators of listed companies (Securities and Exchange Commission of Cambodia, banks and financial institutions (National Bank of Cambodia), and insurance companies (Insurance and Pension Division of the General Department of Financial Industry) are authorized to specify additional financial reporting requirements for entities under their supervision.

    The Law on Accounting and Auditing states that all audits must be conducted in accordance with the standards on auditing as established by the NAC. The Cambodian Auditing and Assurance Standards Board of the NAC adopted ISA as the Cambodian Standards on Auditing and Assurance and other IAASB pronouncements to be applied in the country. The standards were approved by the MEF through Praka No. 370 MEF.

    Listed companies, banks and financial institutions, insurance companies, and private companies that meet two of the following criteria set by the MEF are required to be audited:

    • Annual turnover above 3,000,000,000 Riels (Approx. US$ 750,000);
    • Total assets above 2,000,000,000 Riels (Approx. US$ 500,000); or
    • More than 100 employees.

    Only members of the Kampuchea Institute of Certified Public Accountants and Auditors are allowed to provide audit services.

  • Regulation of Accountancy Profession

    In 2016, the Cambodian government approved the new Law on Accounting and Auditing, replacing the 2002 Law on Corporate Accounts, their Audit and the Accounting Profession. The new law overhauled the regulation of the accountancy profession

    According to the Law on Accounting and Auditing, the National Accounting Council (NAC), previously established by law in 2002, is responsible for regulating the accountancy profession in Cambodia under the direction of the Ministry of Economy and Finance (MEF). Its responsibilities include: (i) setting accounting and auditing standards; (ii) issuing and withdrawing professional licenses to offer accounting services in Cambodia; (iii) establishing mechanisms to investigate violations (investigation and discipline (I&D)); (iv) supervising the activities of the professional body of accounting and auditing; and (v) setting ethical requirements for professional accountants.

    The Cambodian Accounting Standards Board and the Cambodian Auditing and Assurance Standards Board carry out the NAC’s standard-setting responsibilities.

    The Audit Oversight Board (AOB) is tasked with carrying out audit oversight functions on behalf of the NAC. The AOB consists of seven members who are appointed by the MEF and its mandate includes: (i) licensing qualified auditors; (ii) monitoring the quality of audits of financial statements through audit inspections; (iii) inquiring into non-compliance with auditing and ethical standards or relevant statutory requirements; and (iv) imposing disciplinary sanctions.

    Additionally, the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA), established in 2003 under the Law on Corporate Accounts, their Audit and the Accounting Profession and the subsequent decree (“anukret”) on the Organization and Functions of the Kampuchea Institute of Certified Public Accountants and Auditors, is also involved in the regulation of the profession.

    In order to offer accounting and auditing services, individuals must register with the KICPAA and obtain a license from the NAC and/or the AOB, respectively. The KICPAA maintains a list of registered Certified Public Accountants and a list of statutory auditors. The NAC issues licenses to offer professional accounting services while the AOB issues licenses for auditing services.

    All members of KICPAA are members of other foreign professional accountancy organizations, such as the Association of Chartered Certified Accountants (ACCA), the Chartered Professional Accountants of Canada, the Certified Practising Accountants of Australia, and the Institute of Chartered Accountants in England and Wales. The institute also has official agreements with the Malaysian Institute of Accountants, Philippines Institute of Certified Public Accountants, and the Institute of Singapore Chartered Accountants in terms of recognizing foreign qualifications. Individuals must present a copy of the CPA diploma, a practicing certificate and a letter of good standing from their institute, have at least three years of accounting and/or auditing experience, and pass two examinations when applying for KICPAA membership.

    In addition to registering all professional accountants; the KICPAA is responsible for: (i) establishing the initial professional development and continuing professional development requirements for its students and members; (ii) issuing a Code of Ethics for its members; (iii) ensuring adherence to ethical requirements and applicable standards set by the NAC; and (iv) establishing an I&D system for its members.

    Lastly, the National Bank of Cambodia and the Financial Industry General Department of the MEF are permitted to approve auditors of banks, microfinance institutions, and insurance companies while auditors of listed companies need to be approved by the Security and Exchange Commission of Cambodia.

  • Audit Oversight Arrangements

    According to the Law on Accounting and Auditing, the National Accounting Council (NAC), previously established by law in 2002, is responsible for regulating the auditing profession in Cambodia under the supervision of the Ministry of Economy and Finance (MEF). Its responsibilities include: (i) setting auditing standards; (ii) establishing mechanisms to investigate violations (investigation and discipline (I&D)); (iii) supervising the activities of the professional body of accounting and auditing; and (iv) setting ethical requirements for professional accountants.

    The Audit Oversight Board (AOB) was established to carry out audit oversight functions on behalf of the NAC. The AOB consists of seven members who are appointed by the MEF and its mandate includes: (i) licensing qualified auditors; (ii) monitoring the quality of audits of financial statements through audit inspections; (iii) inquiring into non-compliance with auditing and ethical standards or relevant statutory requirements; and (iv) imposing disciplinary sanctions. Meanwhile, the Cambodian Auditing and Assurance Standards Board carries out the NAC’s auditing standard-setting responsibilities.

    Additionally, the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA), established in 2003 under the Law on Corporate Accounts, their Audit and the Accounting Profession and the subsequent decree (“anukret”) on the Organization and Functions of the Kampuchea Institute of Certified Public Accountants and Auditors, is also involved in the regulation of auditors.

    In order to practice auditing in Cambodia, individuals must receive an auditing license from the AOB and be registered on the KICPAA’s list of statutory auditors. In addition to registering individuals that are qualified as auditors, the KICPAA is responsible for: (i) establishing the initial professional development and continuing professional development requirements for its students and members; (ii) issuing a Code of Ethics for its members; (iii) ensuring adherence to ethical requirements and applicable standards set by the NAC; and (iv) establishing an I&D system for its members.

    Lastly, the National Bank of Cambodia and the Financial Industry General Department of the MEF are permitted to approve auditors of banks, microfinance institutions, and insurance companies while auditors of listed companies need to be approved by the Security and Exchange Commission of Cambodia.

  • Professional Accountancy Organizations

    The Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA)

    The KICPAA was established under the Law on Corporate Accounts, their Audit and Accounting Profession (Accounting Law) in 2003. KICPAA functions through its Governing Council and the main statutory functions of the Council include: (i) establishing the initial professional development and continuing professional development requirements for its students and members; (ii) issuing a Code of Ethics for its members; (iii) ensuring adherence to ethical requirements and applicable standards set by the NAC; (iv) establishing an I&D system for its members; and (v) maintaining a list of registered Certified Public Accountants and a list of statutory auditors.

    KICPAA members comprise accountants and auditors who are members of foreign professional accountancy organizations, such as the Association of Chartered Certified Accountants (ACCA), the Chartered Professional Accountants of Canada, the Certified Practising Accountants of Australia, and the Institute of Chartered Accountants in England and Wales. Membership with KICPAA is mandatory for all individuals who wish to perform accountancy services in Cambodia. Finally, in addition to being an Associate of IFAC, KICPAA is also a member of the ASEAN Federation of Accountants.

  • Projects or Other Information

Adoption of International Standards

  • Quality Assurance

    Under the 2016 Law on Accounting and Auditing, the National Accounting Council (NAC) is responsible for monitoring and investigating off-site and on-site inspections to ensure compliance with applicable standards. The Audit Oversight Board was established to carry out the audit oversight functions, which include quality assurance (QA) reviews, on behalf of the NAC.

    In 2017, an Audit Quality and Monitoring Committee (AQMC) was established under with the Ministry of Economy and Finance to conduct QA reviews. The AQMC, which was endorsed by a proclamation (“praka”) of the Ministry of Finance for its independence, is comprised of representatives from the NAC, the National Bank, and the Kampuchea Institute of Certified Public Accountants (KICPAA), among other various stakeholders. In August 2017, the AQMC conducted a pilot round of in-person visits to five firms with the support of the World Bank and PUM Netherlands.

    The KICPAA also reports that the 2010 ISQC 1 has been adopted as the Cambodian International Standard on Quality Control.

    While it appears that there are QA reviews being carried out, it is unclear if AQMC’s procedures are aligned with SMO 1 requirements.

    Current Status: Partially Adopted

  • International Education Standards

    Under the 2016 Law on Accounting and Auditing and the 2003 Decree (“Anukret”) on the Organization and Functions of the Kampuchea Institute of Certified Public Accountants and Auditors, the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA) is responsible for establishing initial professional development (IPD) and continuing professional development (CPD) requirements in Cambodia.

    To be a practicing accountant or auditor in Cambodia, individuals must be a registered member of KICPAA. All members of KICPAA are members of other foreign professional accountancy organizations (PAOs), such as the Association of Chartered Certified Accountants (ACCA), the Chartered Professional Accountants of Canada, the Certified Practicing Accountants of Australia, and the Institute of Chartered Accountants in England and Wales. The institute also has official agreements with CPA Australia, the Malaysian Institute of Accountants, the Philippines Institute of Certified Public Accountants, and the Institute of Singapore Chartered Accountants in terms of recognizing foreign qualifications. While these foreign PAOs have IPD requirements that are in line with the IES, KICPAA also conducts final examinations for candidates and it is not clear if it meets the IES 6 requirements.

    KICPAA reports that it has established CPD requirements for its members that are in line with the IES requirements. Additionally, most members of KICPAA hold membership with foreign professional accountancy organizations and are required to abide by the CPD rules set by their respective organizations.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The National Accounting Council (NAC) is authorized to set applicable auditing standards, which are to be consistent with international standards as issued by the IAASB, in accordance with the 2016 Law on Accounting and Auditing. The Ministry of Economy and Finance (MEF) subsequently issues a proclamation (“praka”) approving the standards for application in the jurisdiction.

    The Cambodian Auditing and Assurance Standards Board of the NAC adopted all ISA as the Cambodian Standards on Auditing and Assurance (CSAA) and other IAASB pronouncements to be applied in the country. These standards were approved by the MEF through Praka No. 370 MEF dated May 18, 2010. The praka states that all updates of the standards are automatically adopted.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    With the passage of the new 2016 Law on Accounting and Auditing, the National Accounting Council (NAC) is responsible for setting ethical requirements for professional accountants in Cambodia. These requirements are to be consistent with international standards. The Ministry of Economy and Finance (MEF) will subsequently issue a proclamation (“praka”) approving the requirements.

    As of September 2017, it is not clear if the NAC has stipulated the relevant ethical requirements. Accordingly, the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA) continues to be the de facto ethics standard-setter as all professional accountants in Cambodia must join the institute.

    Under the 2003 Decree (“Anukret”) on the Organization and Functions of the Kampuchea Institute of Certified Public Accountants and Auditors, KICPAA is authorized establish ethical requirements for its members.

    In 2005, the institute established the KICPAA Code of Ethics for Professional Accountants and Auditors, which was based on the IESBA Code of Ethics at the time.

    As of October 2017, the KICPAA reports that it has completed and submitted a new Code of Ethics to the NAC which would update the ethical requirements to be aligned with the latest version of the IESBA Code of Ethics and be applicable for all professional accountants. KICPAA also indicates that in some instances the proposed Code would be stricter than the IESBA Code of Ethics. KICPAA expects the NAC to approve the new Code by the end of 2017 or early 2018 at which time the institute will then submit the Code for the MEF’s approval.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The National Audit Authority (NAA), a body operating under the Ministry of Economy and Finance but reporting to the National Assembly and Senate, is responsible for adopting public sector accounting standards in Cambodia. According to the World Bank’s 2013 Public Financial Management Policy Note, public sector accounting in Cambodia is a mixture of accrual and cash accounting with many transactions recorded on an accrual basis.

    In 2012, the government agreed to meet the requirements under cash-basis IPSAS and gradually transition to accrual-basis standards. However, as of September 2017, it is unclear if any progress has been made with the adoption and implementation of IPSAS requirements.

    Current Status: Not Adopted

  • Investigation and Discipline

    With the passage of the new 2016 Law on Accounting and Auditing, the National Accounting Council (NAC) is authorized to take disciplinary measures or administrative punishments against professional accountants who violate accounting and auditing regulations. The law specifies the applicable penalties for violations.

    Additionally, the Audit Oversight Board (AOB) is tasked with conducting any inquiries arising from quality assurance inspections, conduct hearings of cases if inquiries result in violations, and imposing sanctions on audit firms and auditors on behalf of the NAC.

    However, as of September 2017, it is not clear if the AOB is carrying out any I&D procedures and, if so, if they are aligned with SMO 6 requirements.

    Therefore, the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA) continues to be the de facto investigative and disciplinary entity of professional standards as all professional accountants in Cambodia must join the institute.

    Under the 2003 Decree (“Anukret”) on the Organization and Functions of the Kampuchea Institute of Certified Public Accountants and Auditors, KICPAA is mandated to establish a Disciplinary Committee for its members.

    As of 2017, the KICPAA reports that due to a lack of resources, the institute has yet to develop an I&D system. The institute reports that its Board has ongoing discussions regarding the establishment of an I&D system but no timeline of actions has been established.

    Current Status: Not Adopted

  • International Financial Reporting Standards

    The 2016 Law on Accounting and Auditing authorizes the National Accounting Council (NAC) to propose and update applicable accounting standards that are consistent with international standards as issued by the IASB. The Ministry of Economy and Finance (MEF) subsequently issued a proclamation (“praka”) approving the standards for application in the jurisdiction.

    In 2012, the Cambodian Accounting Standards Board of the NAC fully adopted IFRS as issued by the IASB and without modifications as the Cambodian International Financial Reporting Standard (CIFRS) and IFRS for Small- and Medium-sized Entities (SMEs) as Cambodian International Financial Reporting Standards for SMEs (CIFRS for SMEs). The MEF approved these standards for application in the jurisdiction through Prakas No. 068 MEF/BK and No. 097/09 MF-NAC. The prakas state that any and all updates of the standards are automatically adopted.

    Public interest entities (PIEs) such as listed companies, banks, microfinance institutions, and insurance companies as well as large private companies are required to apply CIFRS during the preparation of their financial statements. All SMEs and non-PIEs are permitted to use the CIFRS for SMEs or full IFRS.

    Current Status: Adopted

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Methodology

Methodology
Last updated: 04/2018
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