Accounting of Cambodia

Topics: International Financial Reporting Standards, Financial statements, Accountant Pages: 62 (17152 words) Published: December 9, 2012

ACCOUNTING AND AUDITING May 15, 2007 Contents Executive Summary Preface Abbreviations and Acronyms I. Introduction II. Institutional Framework III. Accounting Standards as Designed and as Practiced IV. Auditing Standards as Designed and as Practiced V. Perception of the Quality of Financial Reporting VI. Policy Recommendations EXECUTIVE SUMMARY This report provides an assessment of accounting and auditing practices within the corporate sector in Cambodia with reference to the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and the International Standards on Auditing (ISA) issued by the International Federation of Accountants (IFAC). This assessment is positioned within the broader context of the Cambodia’s institutional framework and capacity needed to ensure the quality of corporate financial reporting Cambodia is putting in place an institutional framework with regard to accounting, auditing, and financial reporting practices. However, institutional weaknesses in regulation, compliance, and enforcement of standards and rules still exist. The accounting and auditing statutory framework suffers from inconsistencies among different laws. Although the national accounting standards and auditing standards are based on IFRS, and ISA, respectively, they appear outmoded and have gaps in comparison with the international equivalents. There are varying compliance gaps in both accounting and auditing practices. These gaps could primarily stem from lack of clearer understanding by professional accountants, inadequate technical capacities of the regulators, absence of implementation guidance, lack of independent oversight of the auditing profession, and shortcomings in professional education and training. There is little awareness of the importance of quality financial information in Cambodia. Financial reporting is driven primarily by complying with requirements of shareholders, obtaining bank loans, and satisfying the taxation regime. Auditing in Cambodia is perceived as an exercise of little value. The law does not outline which standards should be followed in conducting audits. Cambodia’s accounting profession is largely dominated by the members of the Association of Chartered Certified Accountants of the United Kingdom. The Kampuchea Institute of Certified Public Accountants and Auditors is in its early stage of development and should be geared to contribute in creating an enabling environment for high-quality corporate financial reporting and auditing practices in the country. The policy recommendations are aimed for consideration by Cambodian authorities. These principle-based policy recommendations include improving statutory framework, strengthening monitoring and enforcement mechanism, upgrading academic and professional education and training, instituting an arrangement for independent oversight of auditing profession, capacity building of regulators and the professional body, adoption of full IFRS and ISA, upgrading the licensing procedures for accountants and auditors in practice, introducing a Cambodian professional qualification examination with focus on adequate level of practical training, issuing and disseminating implementation guidance on applicable standards, enhancing the delivery of continuing professional education, and ensuring adherence to code of ethics. Considering the limited capacity of Cambodian institutions, the recommendations are premised to integrate with regional initiatives, where possible and to building on the existing systems and promote a gradual and continuing process of improvement.

There is a broad agreement among members of the international financial community that the observance of international standards and codes is pivotal in strengthening national and international financial architecture. In a world of integrated capital markets, financial...
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