PHNOM PENH, Aug. 7 (Xinhua) -- The Cambodian government has told entrepreneurs to prepare their financial reports for audit to pave the way for opening stock market in 2009, an official said on Tuesday.
Ngy Tayi, under-secretary of state of the Ministry of Economics and Finance, said that about 400 companies, which have current asset over 500,000 U.S. dollars and have over 100 employees, have the obligation to prepare the financial reports.
The audit is a new step to promote the management climate of stock market and it also shows transparency, accountability and fairness in opening the stock market, he told a press conference here on promotion of the financial reports for audit.
The stock exchange market will improve the investment climate here and it can help accelerate the economic growth of the country, he added.
Cambodia is set to establish a limited stock market in 2009, Prime Minister Hun Sen said in June, adding that this would encourage long-term investments by the public.
Ngy Tayi, under-secretary of state of the Ministry of Economics and Finance, said that about 400 companies, which have current asset over 500,000 U.S. dollars and have over 100 employees, have the obligation to prepare the financial reports.
The audit is a new step to promote the management climate of stock market and it also shows transparency, accountability and fairness in opening the stock market, he told a press conference here on promotion of the financial reports for audit.
The stock exchange market will improve the investment climate here and it can help accelerate the economic growth of the country, he added.
Cambodia is set to establish a limited stock market in 2009, Prime Minister Hun Sen said in June, adding that this would encourage long-term investments by the public.
4 comments:
Developing capital markets in Cambodia is an important step for the country. The Securities Exchange commission must be independent however under the RGOC more or less like the central bank operates. One issue that must be addressed is the passage of a bankruptcy law prior to the passage of the capital market law. Korea has already promised to assist in the formation of the Phnom Penh Exchange and they should have them run the exchange for at least the first five years until Cambodia gains experience in running the exchange themselves.
I'm just wondering if the stock market can be viable in Cambodia given the level of transparency of the businesses in Cambodia plus the lack in human resources and stakeholders required for the operation of the stock market..
The success of the companies’ audit and the future equities market in Cambodia depends on the followings:
- The willingness of the Ministry of Finance (MoF) to uphold the laws, Anukrets and Prakas regarding Cambodian Accounting and Auditing obligations, tax law, corporate law…
- The National Accounting Council (NAC), government agency, national accounting jurisdiction, falls short of updating the existing Cambodian Accounting Standards and Cambodian Standards on Auditing. The existing standards are impractical and useless;
- The status of the NAC must be reformed. Actually the current status of the NAC does not allow it to extend its capability to monitor the auditing assignments performed in the country. The oversight body is needed;
- The necessity to correct numerous inconsistencies of laws and regulations currently in force in the country; each Ministry enacted laws, Anukrets and Prakas without consultation with each other, this situation may spiral out of control if awareness is not considered (either by the RGC or by the Cambodian Parlement);
- The Kampuchea Institute of CPAs and Auditors (KICPAA) is in its early stage and must be encouraged in its mission to train more professionals. The current supervision of the MoF must be construed as cooperation rather than reprimand: the independence of the professionals, members of KICPAA must be absolutely protected and respected.
- KICPAA’s members should bear in mind that according to Cambodian accounting law, accounting and auditing performed in Cambodia must be in line with the international practices and recommendations especially those of IFAC (International Federation of Accountants). Therefore, KICPAA’s members must strictly follow the Ethics of the profession, and participate as often as they can in the CPD (Professional Continuing Development) to update the skill and competence.
Cambodia is developing, no integrity and transparency of the companies financial statements means simply no trust from investors and give right to cronyism in business, leading Cambodia to square one: conflicts, misery and dishonour again.
Accounting standards is not the problem. There are several international CPA firms in Cambodia such as KPMG, and PW c. Further, at least one foreign owned corp with a branch company in Phnom Penh, was qualified to be listed on the HK Exchange-and this certainly would not have happened if the audits submitted did not meet GAAP acceptable to the regulators.
The key point in setting up the stock exchange, is that of regulation by the yet to be established Securities Exchange Commission of Cambodia, and the Capital Markets Law when passed. The Capital Markets law will authorize the SEC to set up it's own accounting standards for listing which will be GAAP-international std., and it is only the SEC that will have authority over listed companies. The SEC will have it's own hearings for listing, and de-listing, and it's own procedures for liquidation of a listed company.
The other problem is that Cambodia does not have the people yet who have an intimate understanding of capital markets or stock exchanges. The stock exchange should be private, but the oversight will be governmental.
Private companies that want to be listed most probably will have to have at least 3 years of audits by registered CPA firms, but we will have to see the requirements for listing when the draft law comes out.
It is important for Cambodia to have a stock market because companies that can get listed have another way of capitalization since business loans from banks in Cambodia are almost non-existent.
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