Associated Press
PHNOM PENH, Cambodia - Cambodia's government for the first time has begun enforcing a law requiring firms to undergo financial audits, one of a series of steps meant to prepare for launching a stock market in 2009, officials said Thursday.
Some 400 enterprises will be obliged in the initial stage to submit their financial statements to independent auditors by December this year, said Ngy Tayi, an undersecretary of state for Cambodia's Finance Ministry.
Preparing firms for regular audits will help improve financial transparency, which is a "foundation for the successful opening of a stock market," he said. "We must have everything in place before we open a stock market in 2009."
He also said the number of firms requiring outside audits could go higher but he was unable to be precise.
Firms that are subject to auditing are those meeting at least two of three criteria - having annual turnover of three billion riel ($731,700), total assets of two billion riel ($487,800) and 100 employees - according to a Finance Ministry regulation issued Tuesday.
Cambodia passed an audit law in 2002.
But it didn't set clear criteria to stipulate which companies would be audited, said Bretton Sciaroni, a partner of Sciaroni and Associates law firm in the capital Phnom Penh.
"Now the initial criteria are established," Sciaroni said, adding that the new regulation also "lends itself to transparency in the private sector."
"It is widely assumed that most companies do not have audits. Companies that are forced to have audits likely will find it is a useful management tool so that they can be assured of what is going on inside their own company," he said.
He said audits can also be used to help secure financing for companies, and facilitate mergers, acquisitions and joint ventures.
"If Cambodia's stock exchange follows established international models, the audit requirement is a necessary precondition for listing," he said.
Some 400 enterprises will be obliged in the initial stage to submit their financial statements to independent auditors by December this year, said Ngy Tayi, an undersecretary of state for Cambodia's Finance Ministry.
Preparing firms for regular audits will help improve financial transparency, which is a "foundation for the successful opening of a stock market," he said. "We must have everything in place before we open a stock market in 2009."
He also said the number of firms requiring outside audits could go higher but he was unable to be precise.
Firms that are subject to auditing are those meeting at least two of three criteria - having annual turnover of three billion riel ($731,700), total assets of two billion riel ($487,800) and 100 employees - according to a Finance Ministry regulation issued Tuesday.
Cambodia passed an audit law in 2002.
But it didn't set clear criteria to stipulate which companies would be audited, said Bretton Sciaroni, a partner of Sciaroni and Associates law firm in the capital Phnom Penh.
"Now the initial criteria are established," Sciaroni said, adding that the new regulation also "lends itself to transparency in the private sector."
"It is widely assumed that most companies do not have audits. Companies that are forced to have audits likely will find it is a useful management tool so that they can be assured of what is going on inside their own company," he said.
He said audits can also be used to help secure financing for companies, and facilitate mergers, acquisitions and joint ventures.
"If Cambodia's stock exchange follows established international models, the audit requirement is a necessary precondition for listing," he said.
