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Home » Prakas #005 on Accreditation of Professional Accounting Firm Providing Professional Services_2010

Prakas #005 on Accreditation of Professional Accounting Firm Providing Professional Services_2010

Published: 2011 Sep 19

PRAKAS
on

ACCREDITATION OF  PROFESSIONAL
ACCOUNTING FIRM PROVIDING
PROFESSIONAL SERVICES IN THE
SECURITIES SECTOR

All Right Reserved
No part of this Document will be reproduced without the permission of Director General of the Securities
and Exchange Commission of Cambodia

2010

KINGDOM OF CAMBODIA
Nation Religion King

PRAKAS
ON
ACCREDITATION OF PROFESSIONAL ACCOUNTING
FIRM PROVIDING PROFESSIONAL SERVICES
IN THE SECURITIES SECTOR

Deputy Prime Minister
Minister of Economy and Finance
and the Chairman of the Securities and Exchange Commission of Cambodia

–  Having seen the Constitution of the Kingdom of Cambodia;

–  Having seen the Preah Reach Kret No. NS/RKT/0908/1055 on 25 September
2008 on the Appointment of the Royal Government of the Kingdom of
Cambodia;

–  Having seen the Preah Reach Kram No. 02/NS/94 on 20
July 1994
promulgating the Law on the Organizing and Functioning of the Council of
Ministers;

–  Having seen the Preah Reach Kram No. NS/RKM/0196/18 on  24 January 1996
promulgating the Law on the Establishment of the Ministry of Economy and
Finance;

–  Having seen the Preah Reach Kram No. NS/RKM/0107/001 on 10 January 2007
promulgating the Law on Government Securities;

–  Having seen the Preah Reach Kram No. NS/RKM/0107/028 on 19 October 2007
promulgating the Law on the Issuance and Trading of Non-Government
Securities;

–  Having seen the Anukret No. 97/ANKR/BK on 23 July 2008 on the Organizing
and Functioning of the Securities and Exchange Commission of Cambodia;

–  Having seen the Anukret No. 54/ANKR/BK on 08 April 2009 on the
Implementation of the Law on the Issuance and Trading of Non-Government
Securities;

–  In accordance with the approval made by the plenary session of the Securities
and Exchange Commission of Cambodia on …

HEREBY DECIDES
CHAPTER I
GENERAL PROVISIONS

ARTICLE 1.  Purpose
The purpose of this  Prakas  is to prescribe  requirements  relating to  accredit and determine  the obligations of  a professional accounting  firm  and its external auditor  that provide professional services in the Securities Sector pursuant to the Law and Anukret on the Issuance and Trading of Non-Government Securities.

ARTICLE 2.   Definitions
Unless the context requires otherwise, the terms using in this Prakas have the meaning defined in this article or the Glossary Annexed to the Law and Anukret on the Issuance and Trading of Non-Government Securities.

1-  “Code of Ethics”  means  the Code of Professional Ethics  for Certified Public Accountants and statutory auditors  promulgated by  competent  organizations  in the kingdom of Cambodia.

2-  “Professional  accounting firm”  means  an  accounting firm  established in accordance with  the Law  on Corporate Accounts, Their Audit and the Accounting Profession of the kingdom of Cambodia and other related provisions.

3- “Family member” means the husband, wife, child, parent, brother or sister of the individual.

4-  External  auditor  means  a  statutory  auditor who is an active member of  the Kampuchea  Institute of Certified Public Accountants  and Auditors  (KICPAA)  and  under employ in the professional accounting firm.

5- “Audit” means a systematic review or examination of the assertions or actions or financial statements of a business entity to evaluate whether  that entity  is complied with the Cambodian International Financial Reporting Standards (CIFRSs).

CHAPTER II
REQUIREMENTS AND PROCEDURES FOR ACCREDITATION
OF PROFESSIONAL ACCOUTING FIRM
AND EXTERNAL AUDITOR

ARTICLE 3.   Requirements for Accreditation of Professional Accounting Firm
A professional accounting firm that applies for accreditation with the Securities and Exchange Commission of Cambodia (SECC) shall satisfy the following requirements:

1- Operate  in accordance with the Law on Corporate Accounts, Their audit and the Accounting Profession and other related provisions;

2- At least having the capital 500,000,000 (five hundred million) Riels;

3-  At least  having  05 (five)  external auditors    and  fully satisfying  the  conditions prescribed in Article 5 of this Prakas;

4- Having professional liability insurance for the firm and for the external auditors who accredited by the SECC;

5-  Having been established and engaged  business  activities in  the kingdom of Cambodia at least 05  (five) years up to date of filling the application  for accreditation  to the SECC;

6- Having a good reputation in conducting auditing services;

7- Having  the  financial statements  that audited by independent auditor  for last 03 (three) years;

8- Having at least 30  (thirty)  clients a year, 50  (fifty) percent are clients  to which firm provided audit service;

9-  Submitting  application  for accreditation to  the SECC  to  provide  professional services in the Securities Sector according to  Article 4 of this Prakas.

ARTICLE 4.  Application for Accreditation of Professional Accounting Firm
A  professional  accounting firm that applied  for accreditation  shall complete application form to the SECC together with the following documents:

1- Company registration certificate;

2- Certificate of membership from the KICPAA;

3- Approval from Ministry of Economy and Finance;

4-  The list of  updated  external  auditors  registered  as active members with  the KICPAA and  enclosed with curricula vitae of such  external  auditors, which summarize work duration of the auditors and work experience;

5- Audited  financial  statements for  the  last 03 (three) years preceding the date of application for accreditation;

6- The list of audited clients for the last 03 (three) years;

7- The operation report for the last 03 (three) years;

8- Statement of material  changes  that affect the operation and business  result for the last 03 (three) years;

9- Statement of material changes related to the external auditors due to the increase or decrease in the number of auditors, violations of provisions and violations of the code of ethics by the external auditors for the last 03 (three) years;

10- Other documents requested by the Director General of the SECC.

ARTICLE 5.   Requirements for Accreditation of External Auditor
An  external  auditor  of  professional  accounting  firm  that  applies for  accreditation with the SECC shall satisfy the following requirements:

1- Registered as active member of the KICPAA. For foreigner external auditor shall have resident in the kingdom of Cambodia;

2- Having at least 05 (five) years experience in external audit;

3- Having never been sanctioned definitively of any felony or violation of the code of ethics;

4- Having  never been sanctioned definitively of any misdemeanor  not more than last 10 (ten) years;

5-  Submitting  application  for accreditation  to  the SECC  to  provide  professional services in the Securities Sector according to Article 6 of this Prakas.

ARTICLE  6.    Application for Accreditation of External Auditor
An external auditor that applies for accreditation shall complete application form to the SECC together with the following documents:

1- Certificate of Certified Public Accountants (CPAs) or equivalent;

2- Certificate of active membership issued by the KICPAA;

3-  A statement  proving that  external  auditor has never  been subject to  any administrative sanctions;

4- Criminal record issued by competent authorities;

5- Other documents requested by the Director General of the SECC.

ARTICLE 7.  Validation of Accreditation of Professional
Accounting Firm and External Auditor The validation of accreditation of professional accounting firm and external auditor shall be  03  (three)  years.  During  45  (forty five)  days  before the  accreditation expires, professional  accounting firm and  external  auditor that  aim  to resume  providing professional services shall apply to renew the validation of accreditation to the SECC.

In case a professional accounting firm and external auditor  that have not renewed the validation  of accreditation before 45 (forty five) days  of  the  accreditation  expires  as

prescribed in the first paragraph of this Article, professional accounting firm and external auditor shall reapply for accreditation and be liable  for penalty as prescribed in the third paragraph of  Article 24 of this Prakas.

ARTICLE  8.   Duration of Notification to a Person Applies for Accreditation
The  Director  General  of the  SECC  shall  notify  on  accredited  or not accredited professional accounting firm and external auditor within 45 (forty-five)  days after receiving the completed document.

CHAPTER III
OPERATIONAL REQUIREMENTS FOR ACCREDITED
PROFESSIONAL ACCOUNTING FIRM
AND EXTERNAL AUDITOR

ARTICLE  9.   The Selection of Professional Accounting Firm and External Auditor
All securities firm, investment advisory firm, securities market operator, clearance and settlement  facility  operator,  securities  depository operator,  issuing company, professional accounting firm and other companies that conduct a business in the Securities Sector  shall select  among  professional  accounting  firms  and  external  auditors  that  are
accredited and formally published by the SECC.

ARTICLE 10.  Impermissible Conditions for Auditing
A professional accounting firm and external auditor  in the following situations are not allowed to audit the audited entity:

1- Having material financial relations with the audited entity;

2- Family member of director, chief executive officer, internal audit, chief of finance or  other senior officers of the audited entity;

3- Having such economic relations as of joint ventures with audited entity;

4- Having share capital in the audited entity;

5- Obtaining the direct or indirect interests from the audited entity;

6- Any other relationship, as determined by the SECC that may reasonable conflict of interest with audited entity.

ARTICLE 11.   Impermissible Non-Audit Services
A professional accounting firm and external auditor shall not provide the following services to the audited entity:

1-  Bookkeeping or other services related to the accounting  records or financial statements of the audited entity;

2-  Financial information systems design and implementation;

3-  Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;

4-  Actuarial services;

5-  Internal audit outsourcing services;

6-  Management functions or human resources;

7-  Broker or dealer, investment adviser, or investment banking services;

8-  Legal services;

9-  Tax consultation services and

10-   Any other services, as determined by the SECC  that may reasonably conflict of interest.

In  case the accounting firm and  auditor  have  already  provided  any of the  above- mentioned  non-audit services to  any company, the  professional  accounting firm and external auditor are not allowed to sign contract providing audit services to that company within 01 (one) year after above-mentioned non-audit serves completed.

CHAPTER IV
OBLIGATIONS OF ACCREDITED PROFESSIONAL
ACCOUNTING FIRM AND EXTERNAL AUDITOR

ARTICLE 12.  Financial Statements  Subject to  be  Audited  and Reviewed
A  professional  accounting firm and  external  auditor have obligation to audit and review the following financial statements:

1-Statement of Financial Position;

2-Statement of Comprehensive Income;

3-Statement of Cash flow;

4-Statement of Change in Equity;

5-Explanatory notes;

6-Additional reports as determined by the SECC.

ARTICLE 13.  Application Standards
A professional accounting firm and external auditor shall comply regularly with the following standards:

1-  Cambodian International Financial Reporting Standards (CIFRSs);

2-  Standards on Auditing that promulgated in the Kingdom of Cambodia;

3-  Code of Ethics;

4-  Others related laws and provisions.

ARTICLE  14. Obligations  of  Accredited  Professional Accounting Firm and External Auditor
An  accredited  professional  accounting  firm and  external  auditor  shall  have the following obligations:

1- Explain or supply information and data related to auditing activities as requested by the Director General of the SECC;

2- In the course of auditing, if the professional accounting firm and external auditor detect that an audited entity fails to comply with laws and regulations prescribed in Article 13 of this Prakas,  shall notify such to the audited entity  and propose the  latter to take measures  to prevent,  remedy and handle such violations. They  also provide  their comments on errors or violations not yet handled according to Standards on Auditing  in auditing reports and management letters;

3- Shall report to the Director General of the SECC of the following findings:
a.  Material  Fraud or error that affect on  decision  of  securities  investors  or related parties;
b.  Losses or potential losses the aggregate of which amount to at least 10% (ten percent) of the consolidated total asset of the audited entity;
c.  Assets of the company are not adequate to cover the total claims of creditors.

4- Upon resignation, dismissal or cessation of providing professional services in the Securities Sector,  professional accounting firm and external auditor shall report in writing to the Director General of the SECC not later than 07 (seven) working days;

5- The  contract between the  audited entity  and professional  accounting firm shall state  the right of  the  professional  accounting firm  or  external  auditor to disclose information or to submit an audit report to the SECC;

6- If the Director General of the SECC requires to review some doubtful points; the professional accounting firm  shall implement  the review  as  requested by  the  Director General of the SECC;

7-  If  the  SECC detects that  professional  accounting firm has made untruthful or inaccurate audit reports and causing damage to their  audited entity and user of auditing results, such professional accounting firm shall  compensate according to existed law and provisions;

8- Professional accounting firm shall submit quarterly business report to the SECC within 01 (one) month after the end of each quarter and submit annually business report within 03 (three) months after the end of each financial year;

9- Professional accounting firm and external auditor shall perform other obligations required by the SECC.

CHAPTER V
FEES AND CHARGES

ARTICLE 15.   Application Fee for Accreditation of Professional Accounting Firm
A professional accounting firm shall pay for the application fee for accreditation and documents processing of 2,000,000 (two million) Riels.

A professional accounting  firm shall pay  for  the application  fee  for  renewal  of accreditation and documents processing of 1,000,000 ( one million) Riels.

ARTICLE  16.   Application Fee for Accreditation of External Auditor
An external auditor shall pay  for  the application  fee  for accreditation and documents processing of 1,000,000 (one million) Riels.

An external auditor shall pay for the application fee for renewal of accreditation and documents processing of 500,000 (five hundred  thousand) Riels.

ARTICLE 17.   Annual Accreditation Fee for Professional Accounting Firm
An accredited professional accounting firm shall pay the annual accreditation fee to the  SECC  of  2,000,000  (two million) Riels  from the date of accreditation.   For the  first year,  annual accreditation fee shall pay on the  accredited  date.  For the following years, annual accreditation fee shall pay no later than 3o (thirty) days before the accredited date.

ARTICLE 18.    Annual Accreditation Fee for External Auditor
An accredited external auditor shall pay the annual accreditation fee to the SECC of 1,000,000  (one million) Riels from  the date of accreditation.  For the first year, annual accreditation fee shall pay on the accredited date. For the following years, annual accreditation fee shall pay no later than 3o (thirty) days before the accredited date.

ARTICLE 19.      Payment for Application Fee and Documents Processing and Accreditation Fee
Payment for application fee and documents processing and annual accreditation fee to the SECC are not returnable in case of obtain or refusal of accreditation or have been suspended or have been cancelled accredited status.

CHAPTER VI
SUSPENSION AND CANCELATION
OF ACCREDITED STATUS

ARTICLE  20.  Suspension of Accredited Status
The Director General of the SECC may suspend the accredited status of professional accounting firm or external auditor in the following cases:

1- Not performing the obligations prescribed in the chapter 4 of this Prakas;

2- The SECC detects that information in application form and attached documents are untruthful;

3- No independence in auditing as provided under the Code of Ethics;

4- Professional accounting firm has  failed to have a sufficient number of 05 (five) accredited external auditors for 03 (three) consecutive months;

5-  Exist lawsuits against auditing result;

6-  Contravene Article 10 and Article 11 of this Prakas.

ARTICLE 21. Cancellation of Accredited Status
The Director General of  the SECC may cancel  the accredited status of professional accounting firm or external auditor in the following cases:

1-  For Professional Accounting Firm:

– Business registration certificate, member registration certificate with KICPAA or approval of Ministry of Economy and Finance has been revoked;

–  Upon the expiry of the suspension duration prescribed in Article 20 of this Prakas   professional accounting firm still fail to handle the faults which lead to the suspension;

–   Professional accounting firm  has contravened  accounting or auditing prescribed in the  Law on Corporate Accounts, Their audit and Accounting Profession and other related laws and provisions.

2-  For External Auditor:

–  Registration  Certificate  as  an  active member of  external  auditor  has been revoked;

– Upon the expiry of the suspension duration  prescribed in article 20 of this Prakas  external auditor still fail to handle the faults which lead to the suspension;

– External auditor has contravened accounting or auditing prescribed in the Law on Corporate Accounts, Their audit and Accounting  Profession and other related laws and provisions.

ARTICLE 22. Impermissible Business Activities during Suspension and Cancellation of Accredited Status
A  professional accounting  firm or  external  auditor  whose  accreditation  has been suspended  or  canceled  as  prescribed in  Article 20 and  Article 21 of this Prakas shall terminate  the business activities    in the Securities Sector  from the date that of  issuing  a written notice of suspension or cancelation from the Director General of the SECC. In the
case where a professional accounting firm or external auditor has been suspended, it may resume to conduct a business after it receives a written notice from the Director General of the SECC.

CHAPTER VII
PENALTIES

ARTICLE 23. Administrative Sanctions
A professional accounting firm and external auditor that contravene any provisions of this Prakas may  receive the following administrative sanctions:

1- A warning;

2- A correction order;

3- Suspension or cancellation of accredited status.

ARTICLE 24. Penalties
A professional accounting  firm  that contravenes any provisions of this Prakas may be liable for a cash penalty from 20,000,000 (twenty million) to 50,000,000 (fifty million) Riels.

An external auditor who contravenes any provisions of this Prakas may be liable for a cash penalty from 10,000,000 (ten million) to 20,000,000 (twenty million) Riels.

In case  an  accredited  professional  accounting  firm  and external auditor apply for renewal of accreditation to the SECC later than 45 (forty five) days before the validation of accreditation expires, a professional accounting firm and external auditor shall be liable for a cash penalty for late apply 200,000 (two hundred thousand) Riels per day.

CHAPTER XII
FINAL PROVISIONS

ARTICLE 25.  Adoption of Guidelines
The SECC may adopt guidelines in accordance with the Law, Anukret, and this Prakas for  facilitating  the  understanding and enforcement of the requirements of this Prakas to  professional  accounting firms,  external  auditors, stakeholders, related parties, securities market participants and the public.

ARTICLE 26. Abrogated
All provisions contrary to this Prakas are hereby abrogated.

ARTICLE 27.   Application
The  Director General, Deputy-Director  General  of  the  SECC, Securities Issuance Department,  other  Departments  and  other  units of  the  SECC and related parties shall implement this Prakas after the date of signing.

Phnom Penh, ………………………2010

Copy and Distribution:
–  Ministry of Royal Palace
–  Secretariat of Constitutional Council
–  Secretariat of Senate
–  Secretariat of National Assembly
–  Secretariat of Royal Government
–  Cabinet of Samdach Akak Moha Sena Padei Techo Hun Sen
Prime Minister of the Kingdom of Cambodia
–  Cabinet of His/Her Excellencies Deputy Prime Ministers
–  Council of Ministers
–  Ministry of Economy and Finance
–  Ministry of Commerce
–  Ministry of Justice
–  National Bank of Cambodia
–  Other relevant ministries and institutions “for notification and cooperation”
–  Securities and Exchange Commission of Cambodia
–  As prescribed in Article 27 “for implementation”
–  Royal Gazette
–  Archives-records

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