Law on Accounting and Auditing was promulgated by the Royal Decree No.NS/AKM/0416/006 dated 11 April 2016.  The law aims to enhance the accountability and governance of public institutions and enterprises. The Law on Corporate Accounts, Their Audit, and Accounting Profession that was promulgated for use by Royal Code No. NS/RKM/0702/011 dated 8 July 2002 and other regulations which contrast this law are hereby invalidated.

 Scope

This law shall apply to public institutions, enterprises, not-for-profit entities, accountants and auditors. This law shall not apply to the National Bank of Cambodia and the functions and duties that are under the capacity of the National Audit Authority.

Accounting and auditing professional body

The accounting and auditing professions in the Kingdom of Cambodia shall be governed and supported by only one professional body of accounting and auditing and shall have professional independence.

Currently, the accounting and auditing professions in Cambodia is Kampuchea Institute of Certified Public Accountants and Auditors.

Accounting standards

Accounting Standards shall be approved by Prakas of the Minister of the Ministry of Economy and Finance in accordance with the proposal of the NAC. The accounting standards shall be applied by public institutions, enterprises, and not-for profit organizations.

Standards on auditing

Standards on Auditing shall be approved by Prakas of the Minister of the Ministry of Economy and Finance in accordance with the proposal of the NAC. The Standards on Auditing shall be applied by all auditors practicing their services in the Kingdom of Cambodia.

Code of ethics

Accountants and auditors shall have a code of ethics set by Prakas of the Minister of the Ministry of Economy and Finance in accordance with a proposal of from NAC.

Auditors shall not conduct auditing services for any enterprises or not-for-profit organizations that the auditors have previously provided accounting services unless those accounting services were completed at least three years prior. Auditors shall not conduct services for enterprises or not-for-profit organizations for a period exceeding consecutive five years. Auditors, who have direct or indirect interests or management rights through their spouses or relatives or relatives by marriage up to a 3rd level, shall not conduct auditing services for those enterprises or not-for-profit organizations.

Obligation for preparation of financial statements

Financial Statements shall be the statements defined in the Accounting Standards.

Excluding public institutions, enterprises and not-for-profit organizations are obliged to prepare their financial statements within three months of the end of each financial year.

In the event that an enterprise or a not-for profit organization cannot comply with above paragraph, it shall make a written request for the extension of preparations of the financial statements, with precise and reasonable facts and in accordance with effective law and regulations, to the National Accounting Council or relevant regulators.

Financial statements can be required to be submitted for audit according to conditions set out by Prakas of the Minister of the Ministry of Economy and Finance following a proposal of the NAC.

Financial statements shall be the basis for fulfilling tax obligations in accordance with effective laws and regulations.

Enterprises and not-for-profit organizations are obligated to keep accounting records. Every accounting transaction must be based on valid accounting vouchers.

Fiscal year

Each accounting period shall be twelve months starting on the first day of January and ending on the 31st day of December of the same year. For newly established enterprises and not-for profit entities, the first accounting period shall start from the date of its formal formation and ended on the 31st day of December of the same year. Accounting periods other than the above periods can be set for special purpose activities determined by Prakas of the Minister of the Ministry of Economy and Finance in accordance with the proposal of the NAC.

Language and currency

Accounting records and financial statements shall be in Khmer language and expressed in Khmer Riel. Enterprises or a not-for profit entities which has regular carry transactions with foreign entities, may be allowed to prepare their accounting records and financial statements in English and use a foreign currency to accompany the accounting records and financial statements in Khmer language and in Khmer Riel following conditions set out by Prakas of the Minister of the Ministry of Economy and Finance and proposed by the NAC.

Retention of accounting records

Every Enterprise and not-for profit entity is obligated to maintain their respective accounting records at least for a period of ten (10) years starting from the date of the records were created.

Audit reports

Audit reports shall be reports set out in the Standards on Auditing.

The audit report shall be prepared in Khmer language and English language may be used to accompany the report.

Audit evidence shall be maintained for at least ten (10) years from the date of issuance of the audit report.

Accountants and auditors

Natural persons or legal entities can be accountants and/or auditors only if he/she is registered in the list of members of the accounting and auditing professional body.

The categories the accountants and auditors who are members of the accounting and auditor professional body shall be set by an Sub-Decree on the establishment and function of professional body of accounting.

The practice of professional accounting and/or auditing services has a conflict of interest with public and political functions in legislative bodies, executive bodies and the judiciary.

Licenses

Every individual both natural person or legal entity, can practice the accounting or auditing profession unless he/she registers to be a member of the accounting and auditing professional body, and shall have professional license(s) from the NAC.

There are two categories of license: A license for professional accounting services and a license for auditing services.