The Non-Bank Financial Service Authority issued a Prakas on Request for the Use of Special Accounting Period on January 25, 2024. This Prakas delineates the precise prerequisites, formalities, and protocols by which entities may petition for a special accounting period, in accordance with the objectives of the Law on Accounting and Auditing. Nevertheless, it is important to acknowledge that certain tax-related criteria outlined in this Prakas could pose difficulties in their practical application.

Scope and Definition

This Prakas is applicable to companies and non-profit entities operating within Cambodia. As specified in Article 21 of the Law on Accounting and Auditing, a "special accounting period" is any accounting period that deviates from the standard period, which runs from the first day of January to the 31st of December of the same year.

Condition

A enterprise or non-profit organization may request this special accounting if it engages in the following types of activities that are deemed exceptional:

Enterprise

• Financial statement preparation is necessary for any subsidiary, affiliate, branch, or representative office to maintain compliance with the accounting period of the overseas parent company.
• Engaging in activities within the agricultural industry that involve animal husbandry and cultivation, which necessitates an adjustment to the accounting period.
• Conducting business in the education sector necessitates an accounting period adjustment to align with the academic year.
• Those engaged in activities within other sectors of priority must ensure adherence to existing legal regulations.

Non-profit organization

• Responsible for preparing financial statements in accordance with the donor organizations' overseas accounting periods.
• Engaging in activities within the education sector that require an adjustment of the accounting period to align with the academic year.
• Undertook endeavors in additional sectors of priority while assuring adherence to prevailing legal regulations.

Request for Approval

Any enterprise or non-profit organization that has utilized the special accounting period without prior approval must submit a request for this approval no later than six months after the implementation of this Prakas. Specifically, newly established enterprises or non-profit organizations must do so within fifteen days of their registration with the competent authority. The Accounting and Auditing Regulator shall establish the formalities and procedures pertaining to requests.

Punishment

Transitional sanctions as specified in the Sub-Decree on Transitional Penalty for Violations of the Law on Accounting and Auditing shall be imposed for noncompliance with this Prakas.

While this Prakas allows enterprises and NGOs to adjust their accounting periods to meet their circumstances, the rule tax fiscal year is different. Prakas No. 1481 on Tax Year, dated December 31, 2007, allows a tax year deviation from the calendar year in the event that a foreign company, which holds a minimum 51% stake in the resident company, requires the resident company to align its tax year with that of the foreign company.