CAMBODIA lacks the proper legal framework and government oversight to ensure the integrity of the Kingdom's auditing and certified accounting firms, a senior finance ministry official told the Post.
"The Finance Ministry's National Accounting Council (NAC) has not had any laws by which they can inspect or control auditing firms' quality controls, or the effectiveness of those controls," Ngy Tayi, undersecretary of state for the Ministry of Economy and Finance and chairman of the NAC, told the Post following a workshop on financial reporting in Phnom Penh last week.
He said Cambodia has 19 auditing firms, but that only individual certified public accountants are licensed.
"Even though auditors may be guilty of misconduct, no one inspects them. They say they comply with ethical codes of conduct, but who can say for certain? We will amend the law to include provisions for auditing," Ngy Tayi said.
He added that the NAC has tried to amend laws on corporate accounting since 2005 and it hopes to finalise new legal provisions by the end of 2009.
"So far, we have not been able to control private audit firms or individual auditors to make sure they are honest and free of corruption," he said.
He acknowledged that the public has doubts about the honesty and accuracy of Cambodia's auditors.
"All professions have some level of misconduct," he said.
Ngy Tayi said that some officials may currently be able to sign off on company reports they know to be inaccurate or intentionally falsified.
"This is unacceptable. It is a matter of credibility. If auditors do this, we will not be able to proceed with the forthcoming stock market because the public will not trust us if financial statements are inaccurate," he said.
Key Kak, chairman of the firm Morison Kak & Associates, said that he agreed with the regulation of accounting firms "to ensure transparency and accuracy".
Even though auditors may be guilty of misconduct, no one inspects them.
"Auditors should work to a professional code and protect the public's interest," he said.
A shortage of qualified auditors in Cambodia has left about 2,000 businesses without proper oversight, Ngy Tayi said.
"It is necessary ... to increase our number of qualified accountants and auditors," he said, adding that by about 2010, Cambodia could have 150 auditors.
Sam Rainsy Party lawmaker Yim Sovann said last Wednesday amendments to accounting laws will improve NAC oversight, but the organisation would still suffer a credibility gap if inspectors were linked to political parties.
"Most companies ...are owned by businesspeople with close ties to the ruling party's politicians. Even if the NAC inspects auditing firms, their oversight would not be independent or accurate because of the influence of powerful politicians," he said.