Cambodia's antiquated and irregular accounting system will officially meet international
standards when it switches to a proposed Cambodian Accounting System by 2005 said
Ngy Tayi, chairman of the Commission on Accounting Reform.
The Cambodian Accounting System, which has yet to be designed, will be based on the
International Accounting Standard now used by the US and much of the developed world.
The move was spurred by Cambodia's acceptance into the World Trade Organization earlier
this year and a desire not to be left behind in the global marketplace, said Tayi.
He said Cambodia still used the European-French Accounting Standard.
"If we still use [this standard], it means we use it alone in the next coming
years," he said.
Private accountants indicated that the present system in Cambodia is inefficient
since public and private organizations use differing accounting standards, which
complicate transactions and reduce financial transparency.
Despite the new standards, Heng Vanda, director of the Vanda Institute of Accounting
in Phnom Penh, said he was skeptical that the better standards would lure a wave
of new investors.
"I don't think that once the International Accounting Standards are established
for Cambodia there will be many investors who come to invest," said Vanda. "Accounting
is just a small part of what attracts investors to Cambodia. Government policy and
political stablility are the most important."
He cited difficulties in implementing the new standards, as well. A lack of accounting
texts for teaching and research, as well as the low level of human resources, were
the biggest problems.
An accounting law passed in 2002 paved the way for accounting reforms, including
two institutions expected to help manage the sector: the National Accounting Council
(NAC) and the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA).
The institutions will operate under the authority of the Ministry of Economy and
NAC is a regulatory agency that will revise the Cambodian Accounting Standards. KICPAA
is a professional accounting body charged with ensuring the quality of the private
"When we have the International Accounting System...it makes it easier for investors
all over the world who want to invest in Cambodia because it is the same standard
as their countries," said Tayi.
According to the new law, financial statements will include a balance sheet, income
statement, cash flow statement and any explanatory notes.
"After the new law is officially released, I hope we will have more opportunities
to [develop a] stock exchange because international investors have more confidence
in the Cambodian accounting system," said Tayi.