Cambodia will have to bring its financial bookkeeping in-line with International Accounting Standards—a form of record-keeping widely used throughout the world—as the country tries both to make a bid for World Trade Organization membership and make its domestic investment climate more attractive, government and business sector officials said Friday at a financial seminar.
“We need to have accounting that everybody in the world can read—so that they can understand clearly where the money goes,” said Ngy Tayi, undersecretary of state with the Ministry of Finance.
Cambodia currently uses a US-based accounting system known as the General Accepted Accounting Principles. But that system is going to be phased out in 2005 as every country switches to the International Accounting Standards (IAS).
“We will be speaking only one language in the accounting field,” said World Bank representative Sam Ghanty, who said the flow of foreign capital into Cambodia is going to be directly linked with the country’s accounting abilities.
Adherence to its accounting laws—bookkeeping legislation was passed in July—is also necessary for Cambodia’s WTO membership, and well as a future stock market, financial experts say.
Ghanty pointed to Vietnam, which he said made the mistake of establishing a stock market before shifting its bookkeeping practices to the IAS.
Some have said the switch to IAS will be expensive, and difficult for students who have learned the soon-to-be-outdated US and UK system.
At least 600 students are currently learning the older system, said Heng Vanda, principle of the Vanda Faculty of Accounting.
“I think the [US system] is the only one where students can spend $8 to $10 on a book to study. The IAS book is going to cost $400 to $500,” he said.
But he said the differences between the two systems are not that great, and that switching to the IAS might also help fight corrupt business practices.