The Accounting and Auditing Regulator (ACAR) of Cambodia has recently issued a new decision that significantly impacts the licensing process for accounting and auditing professionals. This column summarizes the key points of the decree and its implications for individuals and firms in the industry.

Key Provisions of the Decree

1. Scope: The decree applies to both individuals and legal entities applying for or renewing accounting and auditing profession licenses.

2. Proper and Appropriate Criteria: Applicants must meet specific criteria outlined in the decree’s annex. These criteria aim to evaluate financial integrity, past penalties, and adherence to professional ethics.

3. Extended Application: For legal entities, the criteria apply not only to the entity itself but also to its employees, audit partners, and collaborators involved in accounting or auditing services.

4. Internal Procedures: Licensed entities must establish internal procedures to ensure all relevant personnel meet and maintain the proper and appropriate criteria annually.

5. Reporting Obligations: Licensees must immediately report to ACAR if any of their personnel commit offenses related to dishonesty, forgery, fraud, or face legal issues in areas such as trade, finance, or bankruptcy.

6. Evaluation Process: Entities must evaluate non-compliance situations, considering factors such as the severity of the problem, when it occurred, and the potential risk to clients.

Implications for Professionals and Firms

1. Increased Scrutiny: The decree introduces a more rigorous vetting process for individuals and firms in the accounting and auditing profession.

2. Ongoing Compliance: Meeting the criteria is not a one-time event but an ongoing requirement, necessitating regular internal reviews and updates.

3. Broader Responsibility: Firms are now responsible for ensuring the compliance of a wider range of individuals, including consultants and subcontractors.

4. Potential for Disqualification: The decree outlines specific situations that could lead to the revocation of a license, emphasizing the importance of maintaining high professional standards.

5. Administrative Burden: The new requirements will likely increase the administrative workload for firms, particularly in terms of monitoring and reporting.

Analysis and Recommendations

This decision represents a significant step towards enhancing the integrity and professionalism of the accounting and auditing sector in Cambodia. While it may pose challenges in terms of compliance and administration, it also presents an opportunity for firms to differentiate themselves through rigorous adherence to high ethical and professional standards.

We recommend that all accounting and auditing professionals and firms:
– Thoroughly review the full text of the decision, paying close attention to the specific criteria outlined in the annex.

– Establish or update internal procedures to ensure ongoing compliance with the new requirements.

– Implement regular training programs to ensure all staff are aware of their obligations under the new decision.

– Seek legal advice if there are any uncertainties about how the decree applies to your specific situation.