Logo of Phnom Penh Post newspaper Phnom Penh Post - Accounting practices need practice

Accounting practices need practice

Deloitte country director Koy Kimleng discusses the Kingdoms accounting practices at Phnom Penh Tower
Deloitte country director Koy Kimleng discusses the Kingdoms accounting practices at Phnom Penh Tower earlier this week. Heng Chivoan

Accounting practices need practice

Deloitte is the largest accounting firm in the world, according to 2013 revenue figures, and has some 725 offices servicing 150 countries. Here in Southeast Asia, the firm operates in all ASEAN countries.

Deloitte (Cambodia) country director Koy Kimleng sat down with Post’s May Kunmakara to talk about the Kingdom’s accounting practices and how they impact the government’s tax revenue streams.

What is your overview of Cambodia’s accounting industry?
I think there are two perspectives: the first is the accounting framework and the second is its application.

We adopted two accounting frameworks that are equivalent to the international frameworks, namely International Financial Reporting Standards (IFRS) and International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs) and we call them Cambodian IFRS (CIFRS) and Cambodian IFRS for SMEs (CIFRS for SMEs) respectively. Cambodian Accounting Standards are still in use by banks and microfinance companies though. On this front, we are better than many ASEAN countries that are adopting IFRS standards on a selective and modified basis.

Therefore, there are great demands for qualified accountants in Cambodia to cope with the accounting challenges and demands that come with strong and steady economic growth and increasing investment.

How does accounting help to improve business and tax collection?
It helps a lot. With proper accounting controls, a company can potentially save a lot of money from fraudulent activities; it provides a true and fair state of the financial position, performance and cash flow which is used for important decisions by the management and owners of the company.

The government can benefit from proper accounting management too. Without proper records, there is no basis for tax computation and collection. These companies are more likely to fall into estimated tax regimes that generally pay less tax. I understand that the majority of tax collection is made from real regime tax papers.

How does poor accounting systems diminish the government’s tax collection capabilities?
Tax collection is based on accounting records. Without records, there is no basis. Some actions have actually taken place to improve this situation, although it’s a little bit slow. They are as follows:

• The NAC has drafted a new accounting and auditing law aiming at giving the NAC additional roles in enforcing the accounting and auditing regulations. When the NAC is empowered by this law (and of course implementing prakas), they will be able to go around the country to check if there are companies required to prepare the account.

• Include accountants at companies into a professional body, like KICPAA, so that their knowledge can be improved through learning and development programs.

• Run a Cambodian Professional Qualification program that is available in the country at an affordable fee, to promote accounting skills in the profession.

We know that a large number of family-owned businesses don’t use accounting systems. How does this impact the wider economy?
There is no statistical information available at hand to quantify what percentage of family-owned businesses use what accounting systems. I understand their practical reasons though, especially businesses like a small grocery shop. There are more and more family businesses using an accounting system to help manage the financials. They are generally the businesses that have an ambition to grow, and they do!

The government, especially the National Accounting Council (NAC) led by Ngy Tayi, secretary of state of the Ministry of Economy and Finance, is very keen and attentive to this issue. He has led various workshops and seminars to disseminate accounting requirements. He currently set up a working group to study these groups of companies, in an attempt to develop a simpler framework for them to use. This will be used for software developers in creating simplified system for use by small family businesses.

What has the government done to promote the use of professional accounting systems?
As discussed above, the study of family-owned small businesses was for providing a template for them to use as well as for software companies to develop a user-friendly and low-cost software. On the other hand, as we are a free market economy, companies can’t be forced to use a system. It’s only education and training, especially the benefits of using a system that will be a motivating factor for them to use for their own benefits. With the ASEAN economic community is coming soon, I am sure companies will feel the competition and it’s really time for them to strengthen themselves to compete with the new comers as well as adding value in a merger and acquisition deal.

MOST VIEWED

  • Kingdom’s domestic milk still cannot compete with imports

    Price competition and a lack of confidence by consumers are the main reasons the dairy market cannot compete with imports, said domestic milk producers. The large displays of imported fresh milk at the Kingdom’s supermarkets present a cumbersome obstacle for local producers, they said.

  • ‘Pesticide-laden cucumbers’ kill two, poison 150 in Banteay Meanchey

    At least two youths have died and 243 others are being treated for vomiting, diarrhoea, breathing difficulties, dizziness and muscle weakness after they ate cucumbers suspected to consist of pesticides. The incident happened on Saturday, said Banteay Meanchey provincial police chief Ath Khem. He told The

  • Three dead, 13 injured in collapse at Siem Reap pagoda

    At least three people were killed and more than 10 others injured on Monday after a dining hall under construction collapsed at Prasat Kokchak pagoda in Kokchak commune, Siem Reap province. Provincial police chief Tith Narong said Military Police, soldiers and local volunteers had successfully recovered 16

  • China Unicom enters Cambodia

    China Unicom, the country’s largest telecoms operator, has expanded into Cambodia to build optical telecommunication pathways in the Kingdom as part of the Belt and Road Initiative (BRI). The Hong Kong-listed company officially opened its China Unicom (Cambodia) subsidiary on Monday to become the

  • Forest Harmony’s $18M luxury villas break ground in Kampot

    Local and French joint-venture Forest Harmony has broken ground on its $18 million “second-home” Luxury Holiday Villas project in Kampot province. Century 21 Mekong CEO and local shareholder of the project Chrek Soknim told The Post that the project will comprise 90 villa units covering 18ha on a 97

  • PP-SHV Expressway on track for completion in early 2023

    The construction of the $1.9 billion Phnom Penh-Sihanoukville Expressway, which broke ground at the end of March, is on track to be completed by early 2023, Ministry of Public Works and Transport spokesman Vasim Sorya said on Monday. The 190km high-speed highway linking the capital to the