This is a fundamental introduction to accounting in Cambodia.
Companies in Cambodia are required to follow the accounting standards and provide a true and fair view of the company’s financial performance and position.
Let’s dive into the accounting requirements.
Accounting standards in Cambodia
The National Accounting Council (NAC) of Cambodia has adopted the International Financial Reporting Standards (IFRS) without any amendments as the Cambodian International Financial Reporting Standards (CIFRS).
The IFRS for Small- and Medium-sized Entities (SMEs) was also adopted and referred to as the Cambodian International Financial Reporting Standards for SMEs (CIFRS for SMEs).
All public interest entities (PIE), including listed companies, banks, microfinance institutions and insurance companies are required to apply the CIFRS. Non-PIEs are allowed to use the CIFRS for SMEs, or CIFRS if preferred.
What companies are qualified as small- and medium-sized enterprises?
The following table demonstrates how SMEs are classified.
|Micro||10 employees||Less than 50,000|
|Small||11 – 50 employees||50,001 – 250,000|
|Medium||51 – 100 employees||250,001 – 500,000|
|Large||Over 100 employees||Over 500,001|
Essential accounting compliance requirements for Cambodia companies
When is the financial year-end for companies in Cambodia?
The financial year-end in Cambodia begins on 1 January and ends on 31 December. Companies may seek permission from the Ministry of Economy and Finance to adopt an alternative accounting year.
For newly established companies, the fiscal year is calculated for the first year from the date of incorporation to 31 December of the year of its creation.
All books, records and documents must be kept for 10 years at the business premise in Cambodia, and be in the Khmer language and Cambodian Riel.
Companies that carry out business with foreign countries or are subsidiaries of foreign companies can prepare the accounting records in another language (usually English) and use other currencies along with the records in Khmer and Riel.
Documents, books and records that are required to be kept include:
- Accounting books and records:
- Accounting ledger
- Accounting journal
- Statement of accounts
- Records of payment and receipts
- Profit and loss statements
- Balance sheets
- Letter of credit, applications for letters of credit and bank drafts
- Records of electronic funds transfer
- Credit card transactions
- Bank statements, including cheque records
- Internal or external audit reports
- Business records:
- Purchase and sales records and contracts
- Purchase orders and agreements
- Royalty agreements, pricing agreements and warranty agreements
- Warehouse records and reports
- Manufacturing or production reports and records
- Technical assistance contracts
- Brokerage contracts and records of payment
- Transportation and customs clearance documents:
- Customs declarations and payment receipts
- Cargo manifests and bills of lading
- Required licenses, permits or certificates of origin
- Delivery notes
- Records related to duty and tax exemption, relief, refund and remission
Annual financial statements of Cambodian companies
According to the Cambodian accounting standards, the financial statements include the balance sheet, income statement, statement of changes in equity, cash flow statement and notes to the financial statements and accounting policies notes.
What is included in the notes to the financial statements?
The following must be included in the notes to financial statements:
- Information about the basis of preparation of the financial statements
- Description of the accounting policies
- Additional information of the balance sheet, income statement, cash flow statement and statement of changes in equity
If the following information is not disclosed with other information in the financial statements, it should be included in the notes to the financial statements:
- The company’s domicile
- Type of company
- Country of incorporation
- Address of registered office or principal place of business, if different from the registered office
- Description of the company’s scope of business
What should the accounting policies describe?
The accounting policies must describe:
- The measurement basis used in preparing the financial statements
- The specific accounting policy that is necessary for proper understanding of the financial statements
Accounting policies that companies may consider disclosing include:
- Revenue recognition
- Consolidation principles
- Business combinations
- Joint ventures
- Recognition and depreciation or amortisation of tangible and intangible assets
- Capitalisation of borrowing costs and other expenditures
- Construction contracts
- Financial investments and instruments
- Research and development costs
- Foreign currency translation and hedging
- Definition of cash and cash equivalents
Auditing of financial statements
According to Prakas no.563 MEF BrK, all public enterprises, public limited enterprises and Qualified Investment Projects (QIPs) are required by the law to submit their financial statements for an independent audit.
Enterprises other than public limited companies and QIPs need to submit their financial statements for an independent audit if two of the three conditions below are met:
- Has an annual turnover above KHR 4 billion
- Has total assets above KHR 3 billion
- Has more than 100 employees
Non-profit organisations must submit their financial statements for an independent audit if the two criteria are satisfied:
- Has an annual expense above KHR 2 billion
- Has at least 20 employees
To which authorities must companies submit audited financial statements?
Audited financial statements and auditor’s report must be submitted to the Secretarial office of the NAC within six months and 15 days after the closing date of the accounting records.
Delays are permitted to be requested with the NAC.
Directors are required to submit the annual accounts (audited, if necessary) to the Annual General Meeting of the company.
Penalties for noncompliance
The following table provides a summary of the penalties for noncompliance.
|Type of noncompliance||Large taxpayer||Medium taxpayer||Non-profit organisation|
|Use of different financial year-end period other than the Law of Accounting and Auditing without approval||KHR 2 million||KHR 1.5 million||KHR 800,000|
|Use of other languages in the accounting records and financial statements other than Khmer||KHR 2 million||KHR 1.5 million||KHR 800,000|
|Use of other currency in accounting records and financial statements other than Khmer without approval||KHR 2 million||KHR 1.5 million||KHR 800,000|
|Late or non-filing of financial statements with the Secretarial office of the NAC within the stated deadline||KHR 2 million||KHR 2 million||KHR 1.2 million|
|Failure to maintain accounting records||KHR 10 million||KHR 10 million||KHR 6.4 million|
|Failure to prepare financial statements in accordance with the accounting standards||KHR 10 million||KHR 8 million||KHR 6.4 million|
|Failure to have financial statements audited by an independent auditor||KHR 20 million||KHR 16 million||KHR 1.6 million|
|Failure to use financial statements in accordance with the accounting standards to fulfil tax obligations||KHR 10 million||KHR 8 million||KHR 4.8 million|
|Failure to keep accounting documents as required by the law||KHR 10 million||KHR 8 million||KHR8 million|
Delayed settlement of the penalty (from the date the penalty is received) is subject to the following additional penalties:
- Over 30 days: double penalty amount
- Over 60 days: triple penalty amount
- Over 90 days: legal action initiated by the NAC
It is important that the accounting requirements are met, otherwise, you will be faced with penalties for non-compliance.
To minimize the amount of hassle by doing accounting by yourself, we recommend engaging Acclime’s accounting services, and we will assure you that your accounts will be delivered on time.
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