Cambodia

The 2005 Law on Commercial Enterprises stipulates that all companies in Cambodia must keep accounting records. The 2016 Law on Accounting and Auditing established the framework for promulgating accounting and auditing standards. In January 2021, the Law on Organizing and Functioning of Non-Banking Regulators established the Accounting and Auditing Regulator (ACAR), which replaced the National Accounting Council (NAC) as the regulator of the accountancy profession in Cambodia.

The Law on Accounting and Auditing authorizes the ACAR 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.

Accounting

The Cambodian Accounting Standards Board, operating within the ACAR, has adopted IFRS as issued by the IASB, 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). 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.

Auditing

The Law on Accounting and Auditing states that all audits must be conducted in accordance with the standards on auditing as established by the ACAR. The Cambodian Auditing and Assurance Standards Board of the ACAR 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 4,000,000,000 Riels;
• Total assets above 3,000,000,000 Riels; or
• More than 100 employees.

Not for Profit Entities that meet the two of the following criteria set by the MEF are required to be audited:

• Annual Expenses above 2,000,000,000 Riels; and
• More than 20 employees.

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

In Cambodia, regulatory functions for the accountancy profession are carried out by several entities, including: the Accounting and Auditing Regulator (ACAR) under the supervision of the Ministry of Economy and Finance (MEF), the Audit Quality Monitoring Committee (AQMC) operating on behalf of the ACAR and MEF, and the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA).

The ACAR is newly established as of January 2021 by the Law on Organizing and Functioning of Non-Banking Regulators and replaces the previous regulator known as the National Accounting Council (NAC). Under the direction of the MEF, its responsibilities include: (i) setting accounting and auditing standards; (ii) issuing and withdrawing professional licenses to offer accounting and auditing 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 Audit Quality Monitoring Committee (AQMC) was established to carry out audit oversight functions on behalf of the MEF and ACAR. The AQMC’s mandate includes: (i) monitoring the quality of audits of financial statements through audit inspections; (ii) inquiring into non-compliance with auditing and ethical standards or relevant statutory requirements; and (iii) 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 responsible for: (i) establishing the initial professional development and continuing professional development requirements for its students and members; (ii) drafting the Code of Ethics for its members; (iii) ensuring adherence to ethical requirements and applicable standards set by the ACAR; and (iv) establishing an I&D system for its members.

To offer both accounting and auditing services in Cambodia, individuals and firms must register with the KICPAA and obtain a license from the ACAR. The KICPAA maintains a list of registered Certified Public Accountants and a list of statutory auditors.

The accountancy profession in Cambodia has grown through the inclusion of professional accountants qualified overseas. 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 Practicing 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, a letter of good standing from their institute and have at least three years of accounting and/or auditing experience when applying for KICPAA membership.

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 Securities and Exchange Regulator of Cambodia.

There is no independent audit oversight entity. Regulatory functions are carried out by the Accounting and Auditing Regulator (ACAR) under the supervision of the Ministry of Economy and Finance (MEF), the Audit Quality Monitoring Committee (AQMC), and the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA) described in the Regulation section.

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

The KICPAA was 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. KICPAA is a non-profit organization and the only professional accountancy body in Cambodia. KICPAA roles and functions are as below:

• Register its members and determine qualifications and conditions for becoming members.
• Draft ethical requirements and monitor compliance of its members.
• Administer educational programming for its members and the public.
• Work with regional and international professional accounting bodies, and educational institutions to promote and protect the profession.

KICPAA members comprise accountants and auditors who are members of foreign professional accountancy organizations. Membership with KICPAA is mandatory for all individuals who wish to perform accountancy services in Cambodia. In addition to being an Associate of IFAC, KICPAA is also a member of the ASEAN Federation of Accountants.

• A national CPA program, developed by KICPAA with technical support from ICAEW, is under consideration by the National CPA Program Committee, which sits within the Ministry of Economy and Finance (MEF). The program is expected to be operational in the near future. Additionally, an Accounting Technician Qualification (ATQ) Program has been developed and launched in 2021. This program was funded by UNDP with technical support from ICAEW.

In January 2021, the Law on Organizing and Functioning of Non-Banking Regulators established the Accounting and Auditing Regulator (ACAR), as one of the primary regulators of the accountancy profession in Cambodia under the supervision of the Non-Bank Financial Services Authority. The Non-Bank Financial Services Authority is an entity within the Ministry of Economy and Finance.

Under the law, ACAR is responsible for monitoring and investigating off-site and on-site inspections to ensure compliance with applicable standards.

An Audit Quality and Monitoring Committee (AQMC) was established to carry out QA reviews on behalf of the Ministry of Finance (MEF) and ACAR. The AQMC, which was endorsed by a proclamation (“prakas”) of the MEF for its independence, is comprised of representatives from the ACAR, the National Bank, and the Kampuchea Institute of Certified Public Accountants (KICPAA), among other various stakeholders.

The AQMC’s QA system was developed with the support of consultants from ICAEW and the Asian Development Bank and KICPAA reports that the system is aligned with SMO 1 requirements. All relevant standards as issued by the IAASB including ISQM 1, 2, and the revised ISA 220 have been adopted.

Current Status: Adopted

Under the Law on Accounting and Auditing and the Sub-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 for professional accountants.

To be a practicing accountant or auditor in Cambodia, individuals must be a registered member of KICPAA. KICPAA does not offer a local professional accountancy qualification. All members of KICPAA are members of other foreign professional accountancy organizations (PAOs), such as the Association of Chartered Certified Accountants (ACCA), the CPA Canada, CPA Australia, and the Institute of Chartered Accountants in England and Wales (ICAEW). The institute also has official agreements with 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. Those who enter the profession through the foreign qualifications must pass an exam issued by MEF and undertake three years or practical experience. These foreign PAOs all report to have IPD requirements that are in line with the latest IES.

Meanwhile, KICPAA does establish CPD requirements for its members which it states are in line with IES 7, utilizing an input and output-based approach. Additionally, members of KICPAA are required to abide by the CPD rules set by their respective overseas organizations.

A national CPA program, developed by KICPAA with technical support from ICAEW, is under consideration by the National CPA Program Committee, which sits within the Ministry of Economy and Finance (MEF). The program is expected to be operational in the near future. Additionally, an Accounting Technician Qualification (ATQ) Program has been developed and launched in 2021. This program was funded by UNDP with technical support from ICAEW.

Current Status: Adopted

In January 2021, the Law on Organizing and Functioning of Non-Banking Regulators established the Accounting and Auditing Regulator (ACAR), as one of the primary regulators of the accountancy profession in Cambodia under the supervision of the Non-Bank Financial Services Authority. The Non-Bank Financial Services Authority is an entity within the Ministry of Economy and Finance.

Legislation states that all audits must be conducted in accordance with the standards on auditing as established by ACAR. The standards are to be consistent with international standards as issued by the IAASB. The Ministry of Economy and Finance (MEF) subsequently issues a proclamation (“prakas”) approving the standards for application in the jurisdiction.

The Cambodian Auditing and Assurance Standards Board, operating under the ACAR, has adopted all ISA as the Cambodian Standards on Auditing and Assurance (CSAA) and other IAASB pronouncements. These standards were approved by the MEF through Prakas No. 370 MEF. The prakas states that all updates of the standards are automatically adopted.

Current Status: Adopted

In January 2021, the Law on Organizing and Functioning of Non-Banking Regulators established the Accounting and Auditing Regulator (ACAR), as one of the primary regulators of the accountancy profession in Cambodia under the supervision of the Non-Bank Financial Services Authority. The Non-Bank Financial Services Authority is an entity within the Ministry of Economy and Finance.

ACAR has legal responsibility for setting ethical requirements for professional accountants in Cambodia. The ethical requirements are to be consistent with international standards. The Ministry of Economy and Finance (MEF) will subsequently issue a proclamation (“prakas”) approving the requirements.

The International Code of Ethics issued by the IESBA has been adopted. These standards were approved by a prakas, which states that all updates of the standards are automatically adopted.

Current Status: Adopted

In January 2021, the Law on Organizing and Functioning of Non-Banking Regulators established the Accounting and Auditing Regulator (ACAR), as one of the primary regulators of the accountancy profession in Cambodia under the supervision of the Non-Bank Financial Services Authority. The Non-Bank Financial Services Authority is an entity within the Ministry of Economy and Finance.

ACAR is responsible for adopting public sector accounting standards in Cambodia. The standards are called the Cambodian Public Sector Accounting Standards (CPSAS). 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 under its own national framework.

In 2012, the government agreed to meet requirements under cash-basis IPSAS and gradually transition to accrual-basis standards. The ACAR partnered with Ecorys to train ACAR staff and to work with the government to establish a roadmap to eventually adopt accrual-based accounting. As of October 2022, KICPAA reports that the government has adopted cash-basis IPSAS and is considering how to move to accrual-based IPSAS by 2030.

The stages of adoption include the following:

Stage 1: IPSAS based Cash basis 2019-2024

Stage 2: Cash Modified Basis 2025-2027

Stage 3: Modified Accrual Basis 2028-2030

Stage 4: IPSAS Based Accrual Basis 2031 onward.

More information can be found via the PEFA Performance Assessment Report located here.

Current Status: Partially Adopted

In January 2021, the Law on Organizing and Functioning of Non-Banking Regulators established the Accounting and Auditing Regulator (ACAR), as one of the primary regulators of the accountancy profession in Cambodia under the supervision of the Non-Bank Financial Services Authority. The Non-Bank Financial Services Authority is an entity within the Ministry of Economy and Finance.

Under the law, the ACAR 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. Furthermore, according to the Prakas on Licensing of Accounting and Auditing Practice issued in April 2023, Articles 43 and 44 state that licenses for firms, accountants, and auditors will be suspended if they fail to adhere to the code of ethics. This is contingent upon receiving written confirmation from KICPAA that such non-compliance is against public interests or detrimental to the accounting and auditing profession.

Additionally, the ACAR 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.

Under the Decree (“Anukret”) on the Organization and Functions of the Kampuchea Institute of Certified Public Accountants and Auditors, KICPAA is also mandated to establish an investigative and disciplinary mechanism for its members – which, as a mandatory membership institute, includes all professional accountants in Cambodia.

As of 2023, as established in KICPAA’s By-laws and relevant prakas, KICPAA has created a single Investigation & Disciplinary committee and formulated processes for investigating complaints and issuing any sanctions. Members of this I&D committee include ACAR representatives, KICPAA council members, and KICPAA staff. KICPAA reports that its system is operational and incorporates most of the requirements of SMO 6. KICPAA and ACAR outcomes are done in tandem such that if a KICPAA membership status is suspended or revoked, ACAR's license also will be immediately suspended or revoked.

Current Status: Partially Adopted

In January 2021, the Law on Organizing and Functioning of Non-Banking Regulators established the Accounting and Auditing Regulator (ACAR), as one of the primary regulators of the accountancy profession in Cambodia under the supervision of the Non-Bank Financial Services Authority. The Non-Bank Financial Services Authority is an entity within the Ministry of Economy and Finance.

The legislation authorizes the ACAR 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 issues a proclamation (“prakas”) approving the standards for application in the jurisdiction.

The Cambodian Accounting Standards Board under the ACAR has fully adopted IFRS as issued by the IASB, 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 prakas state that 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

Relevant Organizations

• Kampuchea Institute of Certified Public Accountants and Auditors
• Ministry of Economy and Finance
• National Accountancy Council

Relevant Legislation

• Anukret on the Organization and Functions of the Kampuchea Institute of Certified Public Accountants and Auditors
• KICPAA Bylaws
• Law on Corporate Accounts, their Audits, and the Accounting Profession
• Law on Accounting and Auditing
• Praka No. 068 MEF/BK
• Praka No. 097/09 MF-NAC

Relevant Publications

• IFRS Foundation, “IFRS Application Around the World, Jurisdictional Profile: Cambodia,” 2021.
• KICPAA, Organizational Profile + SMO Action Plan, 2022.
• World Bank, “Audit Quality Assurance in Cambodia Leads To Public Trust And Investor Confidence,” 9 Aug 2017.