PRAKAS ON INTRODUCTION OF FINANCIAL REPORTING TEMPLATE FOR SMALL AND MEDIUM-SIZED ENTERPRISES

Phnom Penh, 16 June 2006

PRAKAS
ON
INTRODUCTION OF FINANCIAL REPORTING TEMPLATE
FOR SMALL AND MEDIUM-SIZED ENTERPRISES

**************

Senior Minister
Minister of Economy and Finance


- Having seen the Constitution of the Kingdom of Cambodia;
- Having seen Royal Decree No NS/RKT/0704/001 dated 13 July 2004 promulgating addendum to the Constitution aimed to secure regular functioning of the national institutions;
- Having seen Royal Decree No NS/RKT/0704/124 dated 15 July 2004 on appointment of the Royal Government of Cambodia;
- Having seen Royal Kram No 02 NS/94 dated 20 July 1994 promulgating Law on Organising and Functioning of the Council of Ministers;
- Having seen Royal Kram No NS/RKM/0196/18 dated 24 January 1996 promulgating Law on Establishment of the Ministry of Economy and Finance;
- Having seen sub-decree No 04/ANKr/BK dated 20 January 2000 on the Composition and Functioning of the Ministry of Economy and Finance;
- Having seen sub-decree No 87/ANKr/BK dated 18 January 2004 on the addition and rectification of a number of departments of the Ministry of Economy and Finance;
- Having seen Royal Kram ChS/RKM/069/03 dated 17 June 1996 promulgating Law on General Statute of Public Enterprises;
- Having seen Royal Kram NS/RKM/0702/011 dated 8 July 2002 promulgating Law on Corporate Accounts, Their Audit and Accounting Profession;
- Having seen Sub-Decree No 08 ANKr BK dated 3 March 2003 on Composition and Functioning of National Accounting Council;
- Having seen Prakas of the Ministry of Economy and Finance No. 170 SHV dated 27 March 2003 on Appointment of Board of Director to the National Accounting Council;
- As requested by the National Accounting Council according to minute of meeting dated 27 March 2006;
- Pursuant to the necessity of the Ministry of Economy and Finance.

DECIDES
Article 1

To introduce to small and medium-sized enterprise defined in article 2 below a standard financial reporting template called "Financial Reporting Template for Small and Medium-Sized Enterprises" as attached in Appendix of this Prakas to use so as to facilitate each small and medium-sized enterprise with a tool to apply for financing from banking and financial institutions, or for other needs at all time before being able to prepare financial statements by due date and in accordance with laws and regulations in force.


Article 2

It is deemed as "SMEs" automatically under this Prakas any enterprise carrying on business activities, which is not subject to obligation of preparing financial statements in accordance with Cambodian Accounting Standards, and based on its declaration data or examination, meets two of the three following criteria:

1. Total maximum workers-employees from 11 to 100.
2. Annual turnover is from 100 million Riels to less than 250 million Riels.
3. Total assets are from 100 million Riels to 250 million Riels.

Article 3

In preparing financial statements in accordance with the template as stated in Article 1 above, each small and medium-sized enterprise shall be responsible for its declaration by ensuring that all data provided are obtained from records or statistics properly maintained in accordance with relevant applicable laws and regulations.

Article 4

National Accounting Council shall be in charge of public dissemination, especially among SME milieu as well as banking and financial institutions, of the spirit of this Prakas and the Financial Reporting Template as in Appendix, and follows through to enforce the implementation until objectives are achieved.

Article 5

National Accounting Council, General Secretariat, General Inspection, all relevant departments and units under the tutelage of the Ministry of Economy and Finance, and all SMEs in the kingdom of Cambodia shall rigorously implement this Prakas in accordance with individual duties.

Article 6

This Prakas is effective from the date of signature.


Senior Minister
Minister of Economy and Finance

Recipients
- As in Article 5 "for implementation"
- Archives-documentation

cc
- Council of Ministers "for information"
- Administration Office of the Council of Ministers "for publication in Royal Gazette"

Forward
The Royal Government of Cambodia has passed many laws in recent years to facilitate Cambodia’s modernization and integration into the global economy. In 2002, the requirement to prepare financial statements was mandated in the Law on Corporate Accounts, their Audit, and the Accounting Profession (“LAAAP”), and in 2003, Cambodian Accounting Standards (“CAS”) were introduced. The purpose of CAS is to provide the basis for recording and classifying financial transactions, and to establish a framework for preparing financial statements.
In 2005, the National Accounting Council (“NAC”), in conjunction with the Asian Development Bank (“ADB”) and the Kampuchea Institute of Certified Public Accountants and Auditors (“KICPAA”), undertook a review of the implementation of the LAAAP. Consequently, a new Prakas was issued, which, inter alia, established thresholds for enterprises to be subject to statutory audit. In addition to establishing the statutory audit thresholds, the Prakas clarified that only those enterprises that were subject to statutory audit were required to prepare financial statements in accordance with CAS.
The Cambodian economy, at its current stage of economic development, is host to a large number of small and medium sized enterprises (“SMEs”) that are not required to prepare financial statements in accordance with CAS. However, these same SMEs often find it difficult to obtain access to finance, due to their inability to provide lending institutions with appropriate financial information.
To assist SMEs to improve their access to finance, NAC and KICPAA, together with Asian Development Bank (ADB), designed the attached financial reporting template as part of ADB’s SME Development Program technical assistance. In addition to the template, this booklet contains explanatory notes on the basis of preparation of the financial reporting template, a definitions section that explains in plain language the various items that make up the financial statements and the terms contained therein, and a brief narrative on why it is important for enterprises to maintain accounting records, and produce financial statements.
I fully encourage SMEs to use the template in this booklet as a basis for preparing financial statements, for both internal management purposes, and for presentation to banks to support an application for a loan.

Phnom Penh , June 14, 2006



H.E. Ngy Tayi
Under Secretary of State of Ministry of Economy and Finance
Chairman of the Cambodian Accounting System Reform and
National Accounting Council



























Table of Contents
Page
1. Forward
2. Overview of Financial Reporting Template for SME 1
3. Benefits of using Financial Reporting Template 3
4. Definitions of terminology 5
i. Balance Sheet 5
ii. Income Statement 10
iii. Notes to Financial Statements 12
5. Instructions on completing the Financial Reporting Template 13
6. Financial Reporting Template 15
i. Financial Reporting Template for company
ii. Financial Reporting Template for sole proprietorship


Overview of Financial Reporting Template for SMEs

Overview

The Financial Reporting Template (“FRT”) has been designed to assist enterprises to prepare a basic set of financial statements. The main reason for developing the FRT is to enable enterprises to provide basic financial information to potential lenders. In addition it is anticipated that by preparing basic financial statements, owners and managers of enterprises will be able to better understand and manage their business.

The FRT is a tool to assist enterprises in preparing their financial statements to accompany an application for borrowing from lenders, and to assist enterprises to comply with the applicable laws and regulations.

What is the FRT?

The FRT includes the following components:

1. Corporate information / enterprise information
2. Statement by Directors / Statement by Owner
3. Balance Sheet
4. Income Statement
5. Notes to the financial statements

An explanation of each component of the FRT follows:

1. Corporate information / enterprise information

This schedule provides the readers of the financial statements with fundamental information about the enterprise.

The registration number indicates the legal form of the enterprise, and should be obtained from the business registration or license certificate issued by the relevant authority.

The registered office is the address of the primary place of business, and should be the same as that registered with the relevant regulatory authority. This address should also be the primary address for communication purposes.

The disclosure of shareholder/owner, directors and management team information provides the readers of the financial statements with important detail about the ownership and management structure of the enterprise. If the directors and management team are different to the shareholders / owners this would indicate that the owners may not be involved in the day to day running of the business.

The disclosure of the principal banker is useful, particularly if the enterprise is seeking credit.

2. Statement by the directors / statement by the owner

Signature of this statement by the directors / owners provides a degree of comfort to users of the financial statements. By signing this statement, the directors / owners acknowledge that the financial statements have been prepared using the accounting policies attached to the notes to the accounts, and implies that users of the financial statements can rely upon the application of those policies in preparing the statements.

Signature ostensibly gives directors / owners ownership of the financial statements.

3. Balance Sheet

The Balance Sheet provides the financial position of the enterprise as at a particular date. In Cambodia, an annual balance sheet is normally prepared as at 31 December of each year.

4. Income statement

The income statement shows the results of the business operations of the enterprise for the accounting period. In Cambodia, the normal accounting period is the year ended 31 December.

5. Notes to the financial statements

The notes to the financial statements comprise:

1. Organization and principal activities
2. Significant accounting policies
3. Assumptions underlying the financial statements
4. Additional information

The “organization and principal activities” is an important disclosure as this allows the user of the financial statement to understand the legal form of the enterprise, its areas of business activity, and size (in terms of employees).

The significant accounting policies allow the reader to understand the accounting policies adopted in preparing the financial statements.

The underlying assumptions disclosure provides further information on the financial statements as to the manner in which the financial statements have been prepared.

The additional information notes provide detailed information for each item that appears on the face of the Balance Sheet and Income Statement.

Benefits of using FRT

The FRT was developed to assist SMEs to produce basic financial statements. The objectives of enabling SMEs to produce basic financial statements are to allow the managers and owners of SMEs to better manage their businesses, and to improve their access to finance by providing basic financial information to potential lenders, primarily commercial banks.

The preparation of financial statements will assist SMEs in the following ways:

1. Better manage the business

The preparation of financial statements will provide important financial information to owners and managers of enterprises to assist in better managing the enterprise. The Income Statement will provide a measure of the operational performance of the enterprise, and the Balance Sheet will provide a snapshot of the health of the business at a particular point in time.

Income Statement - Measure of operational performance

The Income Statement quantifies in monetary terms the results of business operations in any period. By preparing the income statement SMEs will be able to establish whether the business is either making a profit or a loss. By critically reviewing the financial statement, owners and managers will be able to make informed decisions on the operational performance of the business, and the analysis of the income statement will assist in determining actions to be taken to improve business performance.

In particular, owners and managers will be able to monitor revenue streams and expenditure of the business. Operational performance may basically be considered as good if the enterprise makes a profit. Conversely, performance may be considered unsatisfactory if the enterprise makes a loss.

The following are examples of remedial action that an enterprise may take, as a result of the review of the income statement:

Income: If sales during the period decrease there may be a number of different reasons why this happens. One reason may be due to poor customer service. If this is the case, the management may consider providing relevant training and / or incentives to staff who improve the sales of the enterprise.

Expenses: The management may plan to reduce costs in order to maximise profit. One method of reducing costs would be to negotiate better prices and terms with suppliers of goods and services. Discounts will reduce cost of sales and result in increase of enterprise profitability.

On the other hand, the management may review expense items that are costly and find out if it is possible to reduce cost by using substitute products.


Balance Sheet - Financial position

The Balance Sheet provides a snapshot of the financial position of an enterprise at a point in time. An enterprise is generally considered to be in a good financial position if the enterprise has an excess of assets over liabilities, and if there are accumulated profits. Conversely, an enterprise would be considered to be in a poor financial position if liabilities exceed assets, and the enterprise has accumulated losses.

The Balance Sheet will also show the ability of the enterprise to meet future obligations, and will show the assets available to fund future expansion.

By reviewing the balance sheet an owner or manager will be able to make informed decisions about the health of the business.

Liquidity

To survive and prosper a business must be able to meet its financial obligations as and when they fall due. In simple language, this means that a business is able to pay its expenses within the timeframe provided by suppliers. An enterprise is generally considered liquid if its current assets exceed its current liabilities. By preparing a balance sheet an owner or manager will be able to determine the enterprises liquidity.

If the company is extremely liquid, that is, if current assets far exceed current liabilities, then the enterprise may be in a position to expand its business. However, if current liabilities exceed current assets this could indicate that the enterprise may be facing financial difficulties.

2. Better access to finance

For an enterprise to be able to obtain a loan from a bank the enterprise must be able to show the bank that it has a good business, and that it will be able to repay the money borrowed from the bank. The best way to demonstrate to the bank the health of the business is to provide a set of financial statements, including the Income Statement and the Balance Sheet.

In the same way that the Income Statement and Balance Sheet will provide the owner and manager of an enterprise with information to make informed business decisions, the bank will be able to make similar decisions about the enterprise’s ability to repay a bank loan.

If an enterprise provides a bank with a financial statement, this will make it easier for the bank to evaluate the credit worthiness of the enterprise, and should reduce the amount of time that a bank takes to decide whether a loan can be made.

In addition, a proven track record in business, as demonstrated by financial statements covering a number of years, could result in an enterprise obtaining lower interest rates.

3. Cost savings

By preparing their own financial statements owners and managers may not need to engage third parties to prepare financial statements, which would result in cost savings to the enterprise.

Definitions

Introduction

The definitions contained in this document explain the terms included in the Financial Reporting Template (“FRT”). The definitions have been based on the definitions of accounting terms contained in Cambodian Accounting Standard (CAS), however have been simplified in an attempt to allow a broader audience, other than qualified accountants, to understand the content of the Financial Reporting Template.

Definitions

Balance Sheet

The Balance Sheet is a statement that lists all the assets owned by a business, all the liabilities owed by a business, the share capital of, or the owner’s capital contribution to the business, and the earnings retained in the business, as at a particular date. The balance sheet can be described by the following simple equation:

Total Assets = Total Liabilities + Share Capital / Owners Capital Contribution + Retained Earnings

Or

Total Assets – Total Liabilities = Share Capital / Owners Capital Contribution + Retained Earnings

Asset

An asset is an item of value owned by the business.

Liability

A liability is an amount owed by the business to someone else.

Equity

Equity is the difference between the assets owned by an enterprise, and the liabilities owed by an enterprise. Equity normally comprises “Share Capital / Owners Capital Contribution” and “Retained Earnings”.

Related parties

Parties are considered to be related if one party has the ability to control the other party, or exercise significant influence over the other party, in making financial and operating decisions.

Significant influence is participation in the financial and operating policy decisions of an enterprise, but not necessarily controlling those policies.


External parties

Parties are considered to be external if there is no ability for one party to exert control over the other party.

Non-current assets

Assets are classified as “Non-current” if they have an expected useful life of greater than one year, or are not expected to be realized in less than one year. Non-current assets can be sub-classified as follows:

Fixed assets

Fixed assets are assets that are:

• used by an enterprise to produce or supply goods or services,
• used for administrative purposes, or
• rented to others for profit

Fixed assets include buildings, motor vehicles, machines, furniture, and office equipment.

Due from related parties

These are amounts owed to the enterprise by related parties, expected to be repaid after more than one year.

Due from external parties

These are amounts owed to the enterprise by non-related parties, expected to be repaid after more than one year.

Other non-current assets

All other assets not considered fixed assets, due from related parties, or due from external parties, that are not expected to be realized within one year, are classified as “other non-current assets”.

Current assets

An asset should be classified as a current asset when:

(a) it is expected to be realised in, or is held for sale or consumption, in the normal course of the enterprise’s operating cycle; or
(b) it is held primarily for trading purposes or for the short-term and expected to be realised within twelve months of the balance sheet date; or
(c) it is cash or cash equivalent asset (such as bank account) which is not restricted in its use.

Current assets are assets that are expected to be used / or replaced within twelve months of the balance date.


Trade and other receivables

Basically, trade and other receivables are amounts owed to the business by its customers. A receivable arises when goods or services have been sold to a customer, and payment has not been received.

Provision for bad and doubtful debt

A bad debt is a debt that cannot be recovered from a customer. A doubtful debt is a debt that is unlikely to be recovered from a customer.

A provision for bad and doubtful debts should be made at balance date to estimate the amount of debts that will not be collected from customers.

The provision will be deducted from the profit in the Income Statement and will also be deducted from the “Trade and other receivables” figure in the Balance Sheet.

Inventories

Inventories are normally:

• current assets held for sale in the ordinary course of business, or
• current assets used in the production of goods held for resale.

Basically, inventory is the value of stock or goods which exists at the end of the accounting period, and is calculated as follows:

Ending inventory = opening inventory + purchases + goods manufactured – less sales

Due from related parties

These are amounts owed to the enterprise by related parties, expected to be repaid in less than one year.

Due from external parties

These are amounts owed to the enterprise by other parties, who are not customers and related parties, expected to be repaid in less than one year.

Cash and bank balances

Amount of cash held by an enterprise, together with the amount in the enterprise’s bank account(s) at balance sheet date.

Total assets

Total assets are an aggregate amount of total non-current assets and total current assets.


Non-current liabilities

Basically, non-current liabilities are amounts owed to someone else, such as banks and money-lenders, which are payable after twelve months.

Due to related parties

These are amounts owed by the enterprise to related parties, expected to be repaid after more than one year.

Due to external parties

These are amounts owed by the enterprise to non-related parties, expected to be repaid after more than one year.

Current liabilities

A liability should be classified as a current liability when it:

(a) is expected to be settled in the normal course of the enterprise’s operating cycle; or
(b) is due to be settled within twelve months of the balance sheet date.

Basically, current liabilities are what a company currently owes to its suppliers and creditors.

Bank overdraft

A bank overdraft is a bank account where the bank allows the enterprise to “borrow” cash on a short-term basis to meet the needs of the enterprise. The overdraft facility is normally formalized, and subject to the enterprise providing security to secure the amount of the overdraft.

Trade and other payables

Basically, trade and other payables are amounts owed (within twelve months) by an enterprise for goods and services purchased on credit terms. This means payment for goods and services is due at a date later than the date of purchase.

Due to related parties

These are amounts owed by the enterprise to related parties, expected to be repaid in less than one year. These amounts are often advances from shareholders / owners.

Due to external parties

These are amounts owed by the enterprise to other parties, who are not customers and related parties, expected to be repaid in less than one year.

Total liabilities

Total liabilities is the aggregate of total non-current liabilities and current liabilities.


Equity

Equity is the difference between the assets owned by an enterprise, and the liabilities owed by an enterprise. Equity normally comprises “Share Capital / Owners Capital Contribution” and “Retained Earnings”.

Paid up share capital

This represents the money that shareholders invest in the business, and cannot be withdrawn from the business until the business ceases operations.

Owner’s capital contribution

This is similar to Paid Up Capital, and refers to the amount of money a sole proprietor, or owner, puts into the enterprise. The owner’s capital contribution will increase if the owner puts in additional funds, or decrease if the owner withdraws funds, over the life of the business.

Drawings

Drawings represent cash taken out of the business by the owner of the enterprise.

Retained earnings – prior period

“Retained earnings – prior period” are profits earned by the enterprise in periods prior to the current financial year, and not paid out to the owners of the enterprise. If losses were made in prior periods this figure will be negative.

In the first year of enterprise operation, there will be no prior year retained earnings.

Retained earnings - prior period equals the accumulation of profits and losses from the commencement of business until the end of the year prior to the current year.

Retained earnings – current period

These are current year profits not paid out to the owners of the enterprise. This amount should be equal to the “profit/(loss) for the year” in the Income Statement.
Total equity

Total equity is the aggregate amount of Share Capital / Owner Capital contribution, retained earnings for prior periods and retained earnings for current period, less “drawings”.
Total liabilities and equity

The aggregate amount of total liabilities and total equity, and must be equal to total assets.




Income statement

The Income Statement calculates the net profit or loss that the business has made within an accounting period, by deducting all expenditure from the income. A net profit is earned if total revenue exceeds total expenditure; a net loss is made if total expenditure exceeds total revenue.

Revenue

Revenue represents gross income after deducting discount earned by an enterprise from carrying on its normal business activities, and usually is calculated as the value of goods and services sold to customers during the year.

Cost of sales and services

Cost of sales is the cost price of goods and services sold to customers, and is calculated as follows:

- Opening stock, (the cost of stock that exists at the beginning of the year)
- Plus Purchases of goods for resale, during the year
- Plus Production cost of goods manufactured, during the year.
- Less Closing stock, (the cost of stock that exists at the end of the year). Closing stock is equal to “inventory” that appears in the Balance Sheet as inventory in the current assets section.

Gross profit

Gross profit is the difference between revenue and cost of sales and services, and is calculated as follows:

Gross Profit = Revenue – Cost of sales and services

Gross profit is often shown as a percentage, and assists in evaluating the profitability of an enterprise. Normally, the higher the Gross Profit in percentage terms, the more profitable the enterprise.

Other operating income

Other operating income represents income that is not related to the main business activity. Examples of other operating income will be rent (if the main business is not that of a landlord), dividends, profit of sale of fixed assets, insurance claims etc. Other operating income does not include interest income (which is shown separately).

Operating expenses

Operating expenses are costs associated with running a business, but not directly related to the cost of goods and services being sold.



Profit / (loss) from operations

The excess or deficit of total operating income over operating expenditure. The profit or loss is calculated as follows:

Profit / loss = Gross profit / (loss) + other operating income – operating expenses

Profit / (loss) from operations is also called profit / (loss) before interest and tax.

Interest (expense) / income

Interest expense

This is interest charged on borrowings during the year.

Interest income

This is interest earned from:

• money deposited with a bank,
• money lent to related or external parties,
• customers for their late payment under credit terms.

Profit / (loss) before income tax

This is calculated by (deducting) / adding net interest (expense) / income from profit / (loss) from operations.

Income tax expense

Income tax expense represents the amount of profit tax paid to the Tax Department during the year.

Profit / (loss) for the year

Profit / (loss) for the year is the net result of all business activities carried out during the year, and is calculated by deducting income tax expense from profit / (loss) before income tax.



Notes to the financial statements

Accruals basis of accounting

Under this basis, transactions are recognized when they occur regardless of whether cash has been paid or received. Transactions are recorded in the accounting period to which they relate.

Historical cost basis

The historical cost basis of accounting records transactions at the actual cost at the date of the transaction. The costs of each transaction are not adjusted for changes in current costs at a particular valuation date.

Depreciation of fixed assets

Depreciation

Depreciation is the “cost” of writing off fixed assets over their anticipated useful life. In other words, depreciation is the measure of “wearing out” of a fixed asset.

Straight line depreciation

Straight line depreciation writes off the cost of a fixed asset in equal amounts over its useful life. For example, if an asset has a useful life of 5 years, the cost of the asset would be written off in equal amounts over 5 years.

Accumulated Depreciation

Accumulated depreciation is the total depreciation charged from year of buying an asset to the end of the current accounting year.

Net book value

Net book value is the depreciated value of a fixed asset at the end of the year, and is calculated as follows:

Net Book Value = Value of fixed asset at start – accumulated depreciation

The net book value of fixed assets is shown in the balance sheet.


Instructions on Completing FRT for SMEs

The FRT is available in electronic and manual formats. Following are instructions for transferring your financial information into the FRT.
Completing the template using the spreadsheet version
1. Firstly, you will need to make a list, or trial balance, of all income, expenditure, assets, liabilities and capital of the business.
2. From your list, or trial balance, transfer the information to the appropriate classifications in notes 4 to 16 to financial statements. The majority of the detail in the Balance Sheet and Income Statement will be updated automatically once the information has been inserted into the notes to the financial statements.
3. “Other operating income” and “income tax expense” will need to be input directly into the Income Statement from your source of information.
4. Information for “Cash and bank balances”, and “Bank overdraft” will need to be input directly into the Balance Sheet from your information.
5. Insert "Retained earnings – prior periods". This will be taken from the previous year financial statement. Leave this item blank if this is the first year of completing the template.
6. If your information is correctly input, "total assets" will equal "total liabilities and equity", and “Retained Earnings – Current Period” will be equal to “Profit /(loss) for the year” from the Income Statement.
Completing the manual template
1. Firstly, you will need to make a list, or trial balance, of all income, expenditure, assets, liabilities and capital of the business.
2. From your list, or trial balance, transfer the information to the appropriate classifications in notes 4 to 16 to financial statements.
3. Transfer totals from each component in notes 4 to 16 to the financial statements to the corresponding classifications in the Balance Sheet and Income Statement. For example:
Note 4: Fixed assets
Transfer "net book value as at 31 December 20XX1" in total fixed assets column to "fixed assets in column 20XX1" in Balance Sheet.
Note 15: Operating expenses
Transfer total figure in column 20XX1 to "operating expenses" in column 20XX1 in Income Statement.
4. “Other operating income” and “income tax expense” will need to be input directly into the Income Statement from your source of information.
5. Calculate “Profit / (loss) for the year”.
6. Information for “Cash and bank balances” and “Bank overdraft” will need to be input directly into the Balance Sheet from your information.
7. Insert "Retained earnings – prior periods". This will be taken from the previous year financial statement. Leave this item blank if this is the first year of completing the template.
8. Insert “Retained Earnings – Current Period”. The amount should be equal to “Profit / (loss) for the year” from the Income Statement.
9. If your information is correctly input, "total assets" will equal "total liabilities and equity".


FRT for company


ABC CO LTD.
Financial Statements
and
Directors’ Statement
31 December 20XX1


Corporate information

Company ABC Co. Ltd

Registration No. XXXXXXXXXXX
Issued by XXXXXXXXXXX

Registered office XXXXXXXXXXX
XXXXXXXXXXX
XXXXXXXXXXX
Cambodia

Shareholder XXXXXXXXXXX

Directors XXXXXXXXXXX
XXXXXXXXXXX
XXXXXXXXXXX

Management team XXXXXXXXXXX
XXXXXXXXXXX

Principal bankers XXXXXXXXXXX


Contents
Page
1 Statement by the directors 1
2 Balance sheet 2
3 Income statement 3
4 Notes to the financial statements 4


Statement by the directors

We, XXXXXXXXXXXX and XXXXXXXXXXX, on behalf of the Board of Directors do hereby state that the financial statements of ABC Co. Ltd (“the Company”) set out on pages … to … have been prepared in accordance with the accounting policies set out in Notes 2 and 3 to the financial statements.

[Signed on behalf of the Board in accordance with a resolution of the directors,]




XXXXXXXXXXXX
Director




XXXXXXXXXXXX
Director
Date:





20XX1 20XX0
Note R’000 R’000
Non-current assets
Fixed assets 4 - -
Due from related parties 5(a) - -
Due from external parties 6(a) - -
Other non-current assets - -
Total non-current assets - -
Current assets
Trade and other receivables 8 - -
Inventories 7 - -
Due from related parties 5(b) - -
Due from external parties 6(b) - -
Cash and bank balances - -
Total current assets - -
Total assets - -

Non-current liabilities
Due to related parties 10(a) - -
Due to external parties 11(a) - -
Total non-current liabilities - -

Current liabilities
Bank overdraft - -
Trade and other payables 9 - -
Due to related parties 10(b) - -
Due to external parties 11(b) - -
Total current liabilities - -

Total liabilities - -

Equity
Paid up share capital 12 - -
Retained earnings – prior period - -
Retained earnings – current period - -
Total equity - -
Total liabilities and equity - -



These accounts are unaudited. The accompanying notes form part of these financial statements.



20XX1 20XX0
Note R’000 R’000

Revenue 13 - -
Cost of sales and services 14 ( ) ( )
Gross profit - -
Other operating income - -
- -
Operating expenses 15 ( ) ( )
Profit / (loss) from operations - -
Interest (expense) / income 16 ( ) ( )
Profit / (loss) before income tax - -
Income tax expense ( ) ( )
Profit / (loss) for the year - -


















These accounts are unaudited. The accompanying notes form part of these financial statements.

1. Organization and principal activities
The Company was incorporated in Cambodia on __________ under Registration No. _______ and commenced operations on _______.

The principal activities of the Company are
_______________________________________________

As of 31 December 20XX1the Company had ___ employees (20XX0:___).
2. Significant accounting policies
(a) Basis of preparation
The financial statements have been prepared under the accruals basis of accounting, using the historical cost basis.
(b) Currency and foreign exchange
Sale and purchase transactions in foreign currencies are recorded in the Riel equivalent at the date of the transaction. Foreign exchange gains or losses resulting from the settlement of such transactions are recognised in the income statement. Assets and liabilities denominated in foreign currency at the balance sheet date are retained in the balance sheet at historical exchange rates.
(c) Fixed assets
a. Fixed assets are stated at cost less accumulated depreciation.
b. Depreciation
i. Freehold land is not depreciated
ii. Depreciation on fixed assets is charged as expense on a straight-line basis using the following annual rates:
Buildings xx%
Computers, computer software and related equipment xx%
Motor vehicles xx%
Office furniture and office equipment xx%
Other fixed assets xx%




2. Significant accounting policies (continued)
(d) Inventories
Inventories are valued at the lower of cost and net realisable value, and measured on an average cost basis.
(e) Receivables
Receivables are valued at gross book value less provision for doubtful debts.
(f) Non-current loans
Non-current loans are valued at book value, less repayments of principal and provision for non-recovery.
(g) Leases
Lease payments are recognised as expense in the period in which they are incurred.
(h) Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred.
(i) Taxation
Taxation expense is calculated based on the current company tax rate on profits, adjusted for disallowable expenses or exempt forms of income, and taking into account any tax losses available in accordance with the Law on Taxation. Deferred tax is not recognized.


2. Significant accounting policies (continued)
(j) Revenue recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of the revenue can be measured reliably. Revenue is stated net of discounts and allowances.

3. Assumptions underlying the financial statements
The financial statements have been prepared on a going-concern basis, and the accounting policies have been consistently applied. Comparative information has been provided, and immaterial amounts have not been disclosed. Offsetting of assets and liabilities has not taken place.

4. Fixed assets

Land Buildings Computers,
computer software
and related equipment Motor vehicles Office furniture and office equipment
Other fixed assets Construction in progress Total
fixed assets
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Cost
At 1 January 20XX1 - - - - - - - -
Additions - - - - - - - -
Disposed assets – at cost ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
At 31 December 20XX1 - - - - - - - -

Less: Accumulated depreciation
At 1 January 20XX1 - - - - - - - -
Charge during the year - - - - - - - -
Written back during the year ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
At 31 December 20XX1 - - - - - - - -

Net book value
At 31 December 20XX1 - - - - - - - -
At 31 December 20XX0 - - - - - - - -

5. Due from related parties
(a) Non-current

20XX1 20XX0
R’000 R’000
- -
- -
- -
- -

(b) Current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
6. Due from external parties
(a) Non-current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -

(b) Current

20XX1 20XX0
R’000 R’000
- -
- -
- -
- -




7. Inventories
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
8. Trade and other receivables
20XX1 20XX0
R’000 R’000
- -
- -
- -
Less provision for doubtful debts ( ) ( )
- -
9. Trade and other payables
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
10. Due to related parties
(a) Non-current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -



(b) Current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -

11. Due to external parties
(a) Non-current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
(b) Current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
12. Share capital
Name of shareholders 20XX1 20XX0
R’000 R’000
- -
- -
- -
- -




13. Revenue
20XX1 20XX0
R’000 R’000
[list different types of revenue, if necessary] - -
- -
- -
- -
14. Cost of sales
20XX1 20XX0
R’000 R’000
Opening stock - -
Purchases - -
Cost of production - -
- -
Closing stock ( ) ( )
Cost of sales - -


15. Operating expenses
20XX1 20XX0
R’000 R’000
Advertising - -
Audit and accounting - -
Bad debt expense - -
Bank charges - -
Depreciation and amortisation - -
Employee remuneration - -
Entertainment - -
Fringe benefits - -
Meals and accommodation – mission expenses - -
Professional fees - -
Rent - -
Repairs and maintenance - -
Sub-contractors - -
Taxes & duties - -
Transportation - -
- -

Additional expense items may be included where appropriate.
16. Interest expense
20XX1 20XX0
R’000 R’000
Interest income ( ) ( )
Exchange gains ( ) ( )
( ) ( )

Interest expense - -
Exchange losses - -
- -

Net interest expense / (income) - -







FRT for Sole Proprietorship


MR. AAA XYZ
TRADING AS
XYZ ENTERPRISE
Financial Statements
and
Owner’s Statement
31 December 20XX1


Enterprise information

Enterprise XYZ Enterprise

Registration No. XXXXXXXXXXX
Issued by XXXXXXXXXXX

Business address XXXXXXXXXXX
XXXXXXXXXXX
XXXXXXXXXXX
Cambodia

Owner’s name AAA XYZ

Management team XXXXXXXXXXX
XXXXXXXXXXX
XXXXXXXXXXX

Principal bankers XXXXXXXXXXX


Contents
Page
5 Statement by the owner 1
6 Balance sheet 2
7 Income statement 3
8 Notes to the financial statements 4


Statement by the owner

I, Mr. AAA XYZ do hereby state that the financial statements of XYZ Enterprise (“the Enterprise”) set out on pages …. to …. have been prepared in accordance with the accounting policies set out in Notes 2 and 3 to the financial statements.

[Signed by]




Mr AAA XYZ
Owner
















20XX1 20XX0
Note R’000 R’000
Non-current assets
Fixed assets 4 - -
Due from related parties 5(a) - -
Due from external parties 6(a) - -
Other non-current assets - -
Total non-current assets - -
Current assets
Trade and other receivables 8 - -
Inventories 7 - -
Due from related parties 5(b) - -
Due from external parties 6(b) - -
Cash and bank balances - -
Total current assets - -
Total assets - -

Non-current liabilities
Due to related parties 10(a) - -
Due to external parties 11(a) - -
Total non-current liabilities - -

Current liabilities
Bank overdraft - -
Trade and other payables 9 - -
Due to related parties 10(b) - -
Due to external parties 11(b) - -
Total current liabilities - -

Total liabilities - -

Equity
Owners capital contribution 12 - -
Retained earnings – prior period - -
Retained earnings – current period - -
Drawings ( ) ( )
Total equity - -
Total liabilities and equity - -


These accounts are unaudited. The accompanying notes form part of these financial statements.

20XX1 20XX0
Note R’000 R’000

Revenue 13 - -
Cost of sales and services 14 ( ) ( )
Gross profit - -
Other operating income - -
- -
Operating expenses 15 ( ) ( )
Profit / (loss) from operations - -
Interest (expense) / income 16 ( ) ( )
Profit / (loss) before income tax - -
Income tax expense ( ) ( )
Profit / (loss) for the year - -






















These accounts are unaudited. The accompanying notes form part of these financial statements.
1. Organization and principal activities
The Enterprise was incorporated in Cambodia on __________ under Registration No. _______ and commenced operations on _______.

The principal activities of the Enterprise are the ______________________________

As of 31 December 20XX1the Enterprise had ___ employees (20XX0:___).
2. Significant accounting policies
(a) Basis of preparation
The financial statements have been prepared under the accruals basis of accounting, using the historical cost basis.
(b) Currency and foreign exchange
Sale and purchase transactions in foreign currencies are recorded in the Riel equivalent at the date of the transaction. Foreign exchange gains or losses resulting from the settlement of such transactions are recognised in the income statement. Assets and liabilities denominated in foreign currency at the balance sheet date are retained in the balance sheet at historical exchange rates.
(c) Fixed assets
a. Fixed assets are stated at cost less accumulated depreciation.
b. Depreciation
i. Freehold land is not depreciated
ii. Depreciation on fixed assets is charged as expense on a straight-line basis using the following annual rates:
Buildings xx%
Computers, computer software and related equipment xx%
Motor vehicles xx%
Office furniture and office equipment xx %
Other fixed assets xx %



2. Significant accounting policies (continued)
(d) Inventories
Inventories are valued at the lower of cost and net realisable value, and measured on an average cost basis.
(e) Receivables
Receivables are valued at gross book value less provision for doubtful debts.
(f) Non-current loans
Non-current loans are valued at book value, less repayments of principal and provision for non-recovery.
(g) Leases
Lease payments are recognised as expense in the period in which they are incurred.

(h) Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred.
(i) Taxation
Taxation expense is calculated based on the current company tax rate on profits, adjusted for disallowable expenses or exempt forms of income, and taking into account any tax losses available in accordance with the Law on Taxation. Deferred tax is not recognized.


2. Significant accounting policies (continued)
(j) Revenue recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Enterprise and the amount of the revenue can be measured reliably. Revenue is stated net of discounts and allowances.

3. Assumptions underlying the financial statements
The financial statements have been prepared on a going-concern basis, and the accounting policies have been consistently applied. Comparative information has been provided, and immaterial amounts have not been disclosed. Offsetting of assets and liabilities has not taken place.

4. Fixed assets

Land Buildings Computers,
computer software
and related equipment Motor vehicles Office furniture and office equipment
Other fixed assets Construction in progress Total
fixed assets
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Cost
At 1 January 20XX1 - - - - - - - -
Additions - - - - - - - -
Disposed assets – at cost ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
At 31 December 20XX1 - - - - - - - -

Less: Accumulated depreciation
At 1 January 20XX1 - - - - - - - -
Charge during the year - - - - - - - -
Written back during the year ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
At 31 December 20XX1 - - - - - - - -

Net book value
At 31 December 20XX1 - - - - - - - -
At 31 December 20XX0 - - - - - - - -

5. Due from related parties
(a) Non-current

20XX1 20XX0
R’000 R’000
- -
- -
- -
- -

(b) Current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
6. Due from external parties
(a) Non-current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -

(b) Current

20XX1 20XX0
R’000 R’000
- -
- -
- -
- -




7. Inventories
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
8. Trade and other receivables
20XX1 20XX0
R’000 R’000
- -
- -
- -
Less provision for doubtful debts ( ) ( )
- -
9. Trade and other payables
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
10. Due to related parties
(a) Non-current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -



(b) Current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -

11. Due to external parties
(a) Non-current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
(b) Current
20XX1 20XX0
R’000 R’000
- -
- -
- -
- -
12. Owners capital contribution
Name of owner 20XX1 20XX0
R’000 R’000
Mr AAA XYZ - -
- -







13. Revenue
20XX1 20XX0
R’000 R’000
[list different types of revenue, if necessary] - -
- -
- -
- -
14. Cost of sales
20XX1 20XX0
R’000 R’000
Opening stock - -
Purchases - -
Cost of production - -
- -
Closing stock ( ) ( )
Cost of sales - -


15. Operating expenses
20XX1 20XX0
R’000 R’000
Advertising - -
Audit and accounting - -
Bad debt expense - -
Bank charges - -
Depreciation and amortisation - -
Employee remuneration - -
Entertainment - -
Fringe benefits - -
Meals and accommodation – mission expenses - -
Professional fees - -
Rent - -
Repairs and maintenance - -
Sub-contractors - -
Taxes & duties - -
Transportation - -
- -

Additional expense items may be included where appropriate.
16. Interest expense
20XX1 20XX0
R’000 R’000
Interest income ( ) ( )
Exchange gains ( ) ( )
( ) ( )

Interest expense - -
Exchange losses - -
- -

Net interest expense / (income) - -