Cambodia CPA cheat sheet

Cambodia applies Cambodian International Financial Reporting Standards (CIFRS) for public-interest entities and CIFRS for SMEs for non-public entities, issued by the National Accounting Council (NAC).

Five elements of financial statements under the Conceptual Framework: assets, liabilities, equity, income and expenses; recognition requires probability of benefit flow and reliable measurement.

Accrual basis: revenue is recognised when performance obligations are satisfied (CIFRS 15 five-step model: identify contract, identify obligations, determine price, allocate price, recognise on satisfaction).

Lease accounting (CIFRS 16): lessee recognises right-of-use asset and lease liability at present value of lease payments; short-term and low-value leases may be expensed.

Impairment of financial assets uses expected credit loss (ECL) model under CIFRS 9; non-financial assets use recoverable amount (higher of fair value less costs of disposal and value in use) under CIFRS 36.

Depreciation methods: straight-line, reducing balance, units of production; residual value and useful life reviewed at each reporting date; change is a prospective estimate change.

Consolidation: parent controls subsidiary when it has power over relevant activities, exposure to variable returns and ability to use power to affect returns; goodwill is not amortised but tested annually for impairment.

Foreign currency: monetary items retranslated at closing rate with differences to profit or loss; non-monetary items at historical rate; translation of foreign operations to a presentation currency uses closing rate for assets and liabilities.

ISA-based Cambodian Standards on Auditing (CSA) govern audits; the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA) issues professional standards and the National Accounting Council handles accounting standards.

Audit risk model: Audit risk = Inherent risk × Control risk × Detection risk; detection risk is managed by the auditor through the nature, timing and extent of procedures.

Materiality: overall materiality is set (commonly 0.5%–1% of revenue or 5% of profit before tax); performance materiality is lower to reduce aggregation risk.

Sufficiency and appropriateness of evidence: sufficiency = quantity, appropriateness = relevance and reliability; external written confirmations are more reliable than internal documents.

Three types of audit opinions: unmodified, qualified (material but not pervasive), and adverse (material and pervasive); disclaimer where scope limitation is material and pervasive.

Subsequent events review covers the period from financial statement date to auditor's report date; auditor has no obligation to perform procedures after that date unless facts become known.

Going concern: evaluate management's assessment covering at least 12 months from reporting date; if material uncertainty exists, require adequate disclosure and include an emphasis of matter paragraph.

Cambodia's tax administration is governed by the Law on Taxation (as amended 2003) and the Law on Taxation Administration (2014); the General Department of Taxation (GDT) administers tax.

Tax on Profit (ToP) standard rate is 20% for most taxpayers; 30% applies to oil, gas and mineral resource activities; 0% for qualified investment projects (QIPs) under CDC approval.

Annual ToP return is filed within 3 months of year-end; monthly tax return (including withholding and VAT) is filed by the 20th of the following month.

VAT standard rate is 10%; monthly VAT return due by the 20th of the following month; exports are zero-rated; certain goods and services are VAT-exempt (financial services, health, education).

Withholding tax: 15% on payments to resident individuals for services and 15% on non-resident payments; 14% on interest paid to residents; 10% on dividends to non-residents.

Minimum tax is 1% of annual turnover for taxpayers subject to ToP, excluding QIPs; it is creditable against ToP payable.

Salary tax (PIT) uses progressive monthly rates from 0% to 20% for residents; non-residents pay 20% flat on Cambodia-sourced employment income.

Capital gains tax of 20% applies to gains on sale of immovable property, shares and other capital assets; certain exemptions (e.g., principal residence) apply.

The Law on Commercial Enterprises (2005) governs company formation, shares, directors' duties and winding up; companies register with the Ministry of Commerce (MoC).

Two main company forms: private limited company (up to 30 shareholders, shares not freely transferable) and public limited company (may offer shares to the public, subject to SECC regulation).

Directors owe fiduciary duties of loyalty and care; conflict-of-interest transactions require disclosure and, if material, shareholder approval.

The Law on Commercial Arbitration (2006) and the Arbitration Council handle commercial disputes; Cambodia is a party to the New York Convention (since 1960).

Labor Law (1997): maximum 48 hours per week, 8 hours per day; overtime paid at 150% for daytime and 200% for night work; annual leave of 18 days.

Corporate governance: boards should have independent directors, an audit committee and separation of chairman and CEO roles; related-party transactions must be disclosed.

Anti-corruption: the Anti-Corruption Law (2010) criminalises bribery and requires asset declarations for certain public officials; internal controls and whistleblowing channels support compliance.

Cost classification: direct vs indirect, fixed vs variable, product vs period; relevant costs for decisions exclude sunk costs and include opportunity costs.

Contribution margin = sales − variable costs; break-even point (units) = fixed costs ÷ contribution per unit; margin of safety = (budgeted sales − break-even sales) ÷ budgeted sales.

Absorption costing includes fixed production overhead in product cost; variable costing expenses fixed overhead in the period; the difference is inventory change × fixed overhead rate.

Overhead allocation uses a predetermined rate = budgeted overhead ÷ budgeted activity; under/over-absorption = actual overhead − absorbed overhead.

Standard costing variances: material price = (standard price − actual price) × actual quantity; material usage = (standard quantity − actual quantity) × standard price; labour rate and efficiency variances parallel these.

Process costing: equivalent units under FIFO or weighted average; normal loss is absorbed into good units, abnormal loss is expensed; abnormal gain is credited.

Relevant costing rules: accept special orders when incremental revenue exceeds incremental cost; make-or-buy compares avoidable costs with purchase price; shut-down decisions consider avoidable fixed costs.

Time value of money: present value = future value ÷ (1 + r)^n; NPV = sum of discounted cash flows − initial investment; accept projects with positive NPV.

Weighted average cost of capital (WACC) = (E/V × Ke) + (D/V × Kd × (1 − t)); use market values where available.

Capital asset pricing model: Ke = Rf + β × (Rm − Rf); beta measures systematic risk; unsystematic risk is diversifiable.

Working capital: cash conversion cycle = inventory days + receivable days − payable days; shorter cycle frees cash.

Financial ratios: current ratio = current assets ÷ current liabilities; quick ratio excludes inventory; gearing = debt ÷ (debt + equity) or debt ÷ equity depending on definition.

Dividend policy: residual theory pays dividends only after funding positive-NPV projects from retained earnings; dividend irrelevance applies in perfect markets (Modigliani–Miller).

Investment appraisal: IRR is the discount rate giving NPV = 0; accept if IRR exceeds cost of capital; payback ignores cash flows after recovery and time value of money.

Five fundamental principles under the IESBA Code adopted by KICPAA: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

Threats to independence: self-interest, self-review, advocacy, familiarity, intimidation; apply safeguards or decline the engagement when threats are not at an acceptable level.

Confidentiality continues after the professional relationship ends; disclosure is permitted only when required by law, permitted by client, or in legal proceedings.

Auditor independence rules: no financial interest in the client, no close family in a key position, cooling-off period before a former engagement partner joins a client as director.

Professional scepticism: question contradictory evidence, do not accept management representations without corroboration, and document significant judgements.

Ethical conflict resolution: gather facts, apply relevant standards, consult internally, consider external advice, and document the resolution and rationale.

Advocacy threat arises when the accountant promotes a client's position; self-review threat arises when the accountant evaluates work previously performed by the firm.

IT general controls (ITGC): access management, change management, backup and recovery, and operations; weaknesses in ITGCs can undermine reliance on automated application controls.

Application controls: input validation, processing controls (batch totals, edit checks) and output controls (reconciliation, distribution).

CAATs include audit software, test data, parallel simulation and embedded audit modules; data analytics uses ACL, IDEA or Excel/Power Query for full-population testing.

Data analytics techniques: Benford's law for fraud detection, duplicate testing, gap detection, trend and ratio analysis, and stratification of transactions.

ERP systems (SAP, Oracle) store transactions in relational databases; auditors extract data using SQL or system reports and verify completeness via record counts and control totals.

Cybersecurity controls: multi-factor authentication, encryption at rest and in transit, access reviews, and segregation of duties; the CIA triad is confidentiality, integrity, availability.

Cloud and SaaS risks: data residency, vendor lock-in, shared responsibility model, and reliance on service organisation reports (SOC 1/SOC 2) for controls assurance.