Tuesday, November 27, 2007

Integrating ASEAN economies

Opinion and Editorial - November 23, 2007

We should magnanimously acknowledge that we are the laggard in the marathon run to the ASEAN Economic Community in 2015 as our economy, though the largest of the ten member countries, accounting for 230 million of the region's 570 million population, is among the least efficient and least competitive.

The ASEAN Economic Community (AEC) Blueprint adopted at the summit meeting in Singapore on Tuesday therefore imposes on us a heavy load of homework to improve physical infrastructure such as roads, seaport, telecommunications and power supply as well as regulatory and bureaucratic frameworks.

We have only about seven years to gear up for the ASEAN single market -- the main foundation of the economic community -- which allows for the free flow of goods, services, investments and skilled professionals in order to integrate the ASEAN economies into a global economy through global supply chains.

Integration into the global supply chain is perhaps the most important intermediate goal of the AEC Blueprint, because unlike the European Union, ASEAN depends on the external world for more than 25 percent of its trade and for the bulk of its investment needs.

The basic idea has never been to build a European Union-modeled economic community. The main objective is to woo more foreign investment to the ASEAN region as businesses can use one of ASEAN's ten member countries as a regional base for production not only for that particular country but also for the region and the entire global market.

Different investment and trade regimes and different quality standards and regulations on business operations in ASEAN countries as they are now make them less attractive to such potentially giant economies as India and China, which offer huge economies of scale.

The rationale is that foreign investors will have advantages to establish regional production networks in ASEAN countries only if the region has become a reliable part of the global supply chain. That is because without superior logistics capabilities, companies will not be able to tap local comparative advantages and economies of scale.

Manufacturers now require an efficient supply-chain management to allow for lower storage costs, lean manufacturing and just-in-time delivery because they have to adjust to the changes in the whole demand cycle. Without such advances in logistics and supply capability, regional market integration through subdivision and dispersion of production processes among ASEAN countries will not be cost effective.

The groundwork for creating an efficient ASEAN single market is already an uphill challenge by itself because it requires efficient transport, expedient customs services and harmonized customs procedures, common production standards, efficient licensing bureaucracy and easy visa requirements.

ASEAN should make concerted efforts to facilitate the smooth transit of goods between two ASEAN countries through a third and open up air-cargo services, including express delivery firms.

ASEAN needs an independent dispute-settlement mechanism to resolve disputes between members within free-trade implementations, because there are many areas that could cause different views or disputes. Take for example the verification of the country-of-origin certificate with regard to the minimum 40 percent ASEAN content to make products eligible for the tariff-cut regime.

Assessing this minimum ASEAN content could become a major source of disputes because many factories in the ASEAN region still depend on input, parts or components from suppliers outside the region.

Unfortunately, when it comes to logistical arrangements, Indonesia is among the least efficient of ASEAN's six founding members, Brunei, Indonesia, Malaysia, Singapore, Thailand and the Philippines, as national and international surveys have often confirmed. The main reasons are crumbling basic infrastructure, red tape and corruption.

The Asian Development Bank rightly pointed out in a recent report that Indonesia's top-priority homework with regards to preparations for the AEC should be the development of good governance and improvement of basic infrastructure and the investment climate.

If our economy does not improve its overall efficiency and competitiveness it will be other ASEAN countries that will benefit greatly from the single market concept as foreign investors will set up their regional production bases in other ASEAN countries, such as Vietnam, Thailand or Malaysia.

Our economy will become simply the market outlet for products and services from other ASEAN countries. We will not even be able benefit from the free flow of skilled professionals between ASEAN. We may instead lose many of our best doctors, nurses, accountants, architects or other professionals to other ASEAN countries which can offer a better working atmosphere and remuneration.


Source: http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20071123.G01

Sunday, October 21, 2007

Law on Corporate Accounts, Their Audit and The Accounting Profession

The Law on Corporate Accounts, Their Audit and The Accounting Profession, which is adopted by the National Assembly on the 24th May 2002 at its 8th plenary session of the second legislature and entirely approved by the Senate on its form and legal concepts on the 21st June 2002 at its 7th plenary session of the first legislature, and which has its full substance as follows: Read More

GOVERNANCE ACTION PLAN II 2005-2008

FINANCIAL SECTOR DEVELOPMENT

The financial sector including banking and insurance sectors and other relevant activities are in their starting stage and have played their crucial roles and the development of the national economy. The Royal Government of Cambodia has made its efforts to reform the financial sector in Cambodia that has been successful and so far obtained many big achievements. The sector is developed and generated increasing confidence.

The Royal Government has successfully implemented the first step of the 2001-2010 Financial Sector Development Blueprint by mobilizing all the financial resources to meet the needs in manufacturing and support economic growth.

In the financial sector, the Royal Government has strengthen law enforcement and supervise commercial banks through the issuance of new licenses together with increased capital requirements, initiate monitoring and control mechanism to develop single account. The Government is drafting other legislation in order to strengthen the confidence in the banking sector. In the rural financial sector, the Royal Government has strengthened micro finance institutions requiring them to abide by the laws to facilitate control and monitoring as well as to reduce interest rates. As a result, a number of MFIs have expanded their financial services and become commercial banks.

Achievements made include:

*

Introduction and implementation of on and off-site inspections to financial institutions
*

Liquidation of non performing banks
*

Privatization of the Foreign Trade Bank
*

Revision and improvement of existing rules and regulations to ascertain better and effective law enforcement
*

Monitoring and control banks performance with the Uniform Chart of Accounts that is in line with the International Accounting Standards

Financial Industry Development

The financial industry has remarkably developed since its inception in the early 1990s. It is made of big sectors such as Insurance and Capital Market. The Insurance sector was established in the early 1990s starting with the Cambodian National Insurance Company (CAMINCO) and in 1994 it was under the direct supervision of MEF. In 2002, 4 insurance companies that invested in the sector include Indochine, Forte, Asia, and Pana.

To achieve development MEF has formulated legislations, Sub-decrees, and Prakas to supervise the financial industry. Insurance premium increased from USD 5,487,087 in 2002 to USD 8,821,708 in 2003 with an increase equivalent to about 60 percent. On the other hand, the sales of insurance policies increased from 23,120 in 2002 to 28,297 in 2003. At the same time, the supply of insurance services has subsequently increased: from property to general travel insurance.

Concerning the capital market, the Royal Government has made its efforts and decided to form a Capital Market Task Force. The team has been very active in laying the foundation for capital market including the establishment of Capital Market Monitoring Mechanism and developing the activities of the officials of the Capital Market Office. The team has conducted inter-ministerial meetings to discuss the draft Law on the Issuance and transactions of Public Bonds.

National Accounting Council Development

The Law on Enterprise Accounting, Auditing and Their Professions that became effective led to the submission of the Sub-decree on the Establishment of the National Accounting Council to the plenary session of the Council of Ministers that was approved and signed by Samdech Prime Minister HUN SEN on March 03, 2003. On March 27, 2003, MEF issued a Prakas on the Assignment of the Board of Directors to the National Accounting Council that comprises of 13 members from state institutions and private organizations. So far the Board of Directors have convened many meetings to review and to discuss the 15 Accounting Standards and 10 Auditing Standards and on many other provisions.

Similarly, the draft Sub-decree on the Establishment of the Khmer Institute of Certified Public Accountants and Auditors (KICPAA) was also approved at the plenary session of the Council of Ministers and signed by Samdech Prime Minister HUN SEN on March 19, 2003. Due to the efforts made by the National Accounting Council as well as the International Accounting Standards Research Committee (IASRC) with the collaboration and Assistance from NGOs and the private sector, the 15 Accounting Standards and 10 Auditing Standards were approved on October 16, 2003.

IASRC, NAC, and KICPAA shall continue to study and research the remaining standards among the overall 43 accounting standards, and 20 auditing standards used worldwide to meet the requirement of the Cambodian Economy that is gradually taking off. Apart from that, a number of legal frameworks and institutions have been established as well, such as:

1.

The implementation of the Cambodian Accounting and Auditing Standards
2.

The establishment of a Commission to register licensed Certified Public Accountants and Auditors

Also, in order to develop and supervise the accounting profession so as to suit its development either within national or international framework, norms or rules are required for licensed certified public accountants and auditors, so that they can conduct these businesses in Cambodia. In response to such a need, NAC and KICPAA have jointly made efforts to produce the Code of Conduct for licensed certified public accountants and auditors through a Sub-decree that was approved at the plenary session of the Council of Ministers on June 03, 2005. Samdech Prime Minister HUN SEN signed the Sub-decree No. 83 on June 17, 2005.

The Sub-decree divided into 7 Chapters with 38 Articles with its major substance focused on Public Interests, Basic Principles for Accountants, Resolution of Conflicts on Code of Conduct, and Disciplinary Sanctions.

On top of that, NAC has tried to conduct training through a Perfect and Strict Training Program organized by CamEd which is a private vocational training organization. NAC and CamEd have conducted 6-generation trainings to 233 students (only for those who received scholarships from the Government). Of which, one session on Certified Accounting Technicians with 43 students and 5 sessions on Certified Public Accountants and Auditors with 190 students following ACCA’s curricula will receive their degrees from ACCA.

For Certified Public Accountants, training will require at least 3 years and go through a course of instructions directed at Accounting and Auditing Firms at least for 3 more years to become a CPA. Provisional results of generations 1, 3, and 4 have shown that there were at least 40-60 percent of civil servants who passed each course successfully and may receive the CPA degree in the near future.

In the short run NAC has much work to complete such as the verification of the name of registered companies and those that registered tax payments as the real regime; the dissemination of the Law on Enterprise Accounting, Auditing, and Their Professions, and Cambodian Accounting and Auditing Standards to students of tertiary education and companies that are conducting their business in the Kingdom of Cambodia; and the preparation of the Cambodian Syllabus for CPA.


Read More

Sunday, September 09, 2007

Insurance firms see healthy growth

CAMBODIA: Building a strong insurance industry

Source: Phnom Penh Post

"Insurance is viewed as an essential product for a well-functioning financial market. But Cambodia's insurance industry has had a stuttering start. Cambodia's current crop of insurers is small. As the government plans to introduce, among other advances, a Cambodian stock market, new insurance carriers are undoubtedly to be welcomed.

Cambodia's 'open, friendly investment policy' means there are few barriers towards setting up business in the country. The total insurance market in Cambodia, estimated to be worth less than $8 million in 2004, has now grown to $15 million and is expected to increase rapidly as its
potential is realized. But companies may find it difficult breaking into the personal insurance market. Until the last couple of years, not many individuals had bank accounts. The perception is that insurance is an expensive luxury product."

Full article:
http://www.phnompenhpost.com/TXT/current/stories/1616/insuran.htm

Saturday, September 08, 2007

Sample Online Accounting Course

This website is the best accounting tutorial for learning accounting principles, accounting terms, and accounting equation. Whether you attend a college, run a small business or seek an accounting refresher, you have come to the right accounting class online. Simplestudies.com covers major accounting principles in a set of free online accounting lessons, provides accounting problems to strengthen your knowledge and has solutions to check your accounting answers. Start below with the list of online accounting lessons and enjoy this free and easy tutorial!



Visit the site : Sample Online Accounting Course Website

Accounting Reform Website

Dear Reader

I've found a very good website which is talking about the particle of International Financial Reporting Standard and International Accounting Standard. This website is funded by EU and support by ACCA.

You can find sample articles and worksheet about IFRS and IAS from there.


here is the link to Russian Accounting Reform Website: http://www.accountingreform.ru/en/main/

Ponlork

Thursday, August 30, 2007

Incomplete records

by Neil Stein
26 Aug 2004

Examiners like questions on incomplete records because they provide the opportunity to test a variety of bookkeeping and accounting techniques.

The two main instances in which incomplete records can be found are where:

  • there are no records at all
  • some records exist and information is available to calculate missing figures.

No records at all
It is still possible to calculate a profit or loss figure by using the fact that the profit of a business must be represented by more assets. We list and value the opening and closing net assets, then calculate the profit as the difference between the two:
Profit = Closing net assets - Opening net assets

Allowance must be made for proprietor's drawings and extra capital introduced, so the formula becomes:
Profit = Closing net assets - Opening net assets + Drawings - Capital introduced

There is little scope here for a major question, but it could form the basis of a two-mark multiple-choice question.

Incomplete records
This a more common scenario, both in exam questions and in practice. There are standard techniques for calculating missing figures:

  • Opening capital
  • Missing figures for sales and purchases
  • Missing figures for cash.

Opening capital
We need to have the opening capital of the business at the beginning of a period to provide a starting point - the capital in the balance sheet account. Questions will usually give us a list of opening assets and liabilities, and we use this to arrive at the opening capital.

Missing figures for sales and purchases
If we know the opening and closing debtors of a business, and the cash received from customers, we can calculate sales. All we need to do is set up a sales ledger total account (see Figure 1).

Figure 1: Sales ledger total account (figures invented)
£
£
Opening debtors
38,600
Cash received
218,650


Sales (balancing figure)
221,250
Closing debtors
41,200
259,850

259,850

If any three of these figures is known, the fourth can be calculated.

All we are doing here is using the sales ledger control account format, but instead of proving the accuracy of the sales ledger, we are calculating what the sales must have been in order for the other figures to be what they are. The same technique may be used to calculate credit purchases. If the sales figure is given we can calculate the cash received.

There is another way to calculate sales, purchases or stock figures, and that is to use the trading account format. We normally set up the trading account as (figures invented):

£
£
Sales
100,000
Less: cost of sales

opening stock
10,000

purchases
78,000

88,000

less: closing stock
13,000
75,000
gross profit
25,000

Suppose the closing stock has been destroyed by fire, along with all the stock records. Then we wouldn't have the closing stock total to include in our trading account. However, we can calculate it if we know the gross profit percentage on sales - or, of course, the mark-up on cost of sales.

In the example above, gross profit is 25 per cent of sales. If we are told this, we can insert the gross profit of £25,000 and so calculate the missing stock figure as a balancing item. We can also find a missing purchases figure, or even a missing sales figure.

Suppose we are given:

£
£
Cost of sales

opening stock
10,000

purchases
78,000

88,000

less: closing stock
13,000
75,000

We are also told that gross profit percentage on sales is 25 per cent. If gross profit is 25 per cent on sales, cost of sales must be 75 per cent of sales. The sales total is therefore:
£75,000 x 100/75 = £100,000.

Whenever the gross profit percentage is given in an incomplete records question, you know that this technique is needed.

Missing figures for cash
We may be given details of cash receipts and payments plus details of opening and closing balances, but with one figure missing, often the proprietor's drawings. We can calculate the missing figure by setting up a cash account to find the balancing item required.

Here are the incomplete records techniques:

Construct To calculate
1 Opening assets and liabilities Opening capital
2 Sales or purchases ledger total accounts Any missing figure
3 Trading account (gross profit percentage must be given) Any missing figure
4 Cash account Any missing figure

There is only one way to develop fluency in incomplete records questions, and that is to practise as many questions as you can. Here are three short exercises:

  1. The net assets of Altese, a trader, at 1 January 2003 amounted to £128,000. During the year to 31 December 2003, Altese introduced a further £50,000 of capital and made drawings of £48,000. At 31 December 2003, Altese's net assets totalled £184,000. Using this information compute Altese's total profit for the year ended 31 December 2003.
  2. Senji does not keep proper accounting records, and it is necessary to calculate her total purchases for the year ended 31 January 2004 from the following information:
    £
    Trade creditors
    31 January 2003
    130,400
    31 January 2004
    171,250
    Payments to suppliers
    888,400
    Cost of goods taken by Senji for her personal use
    1,000
    Refunds received from suppliers
    2,400
    Discounts received
    11,200

    Compute the figure for purchases for inclusion in Senji's financial statements.
  3. Aluki fixes prices to make a standard gross profit percentage on sales of 331/3%. The following information is available for the year ended 31 January 2004 to compute her sales total for the year:
    £
    Stock
    1 February 2003
    243,000
    31 January 2004
    261,700
    Purchases
    595,400
    Purchases returns
    41,200

    Calculate the sales figure for the year ended 31 January 2004.

Answers


  1. £
    Opening capital
    128,000
    Capital introduced
    50,000
    178,000
    less: Drawings
    48,000
    130,000
    Closing capital
    184,000
    Profit is therefore
    54,000

  2. See Figure 2.
    Figure 2: Purchases total account
    £
    £
    Payments to suppliers
    888,400
    Balance brought forward
    130,400
    Discounts received
    11,200
    Goods taken by Senji
    1,000
    Balance carried forward
    171,250
    Refunds from suppliers
    2,400

    Purchases (balancing figure)
    937,050
    1,070,850
    1,070,850


  3. £
    £
    Cost of sales

    Opening stock
    243,000
    Purchases
    595,400

    less: Returns
    41,200
    554,200

    797,200
    less: Closing stock
    261,700

    535,500
    Sales figure is therefore:
    £535,500 x 3/2 =

    803,250

These three examples are quite elementary, but they illustrate techniques that you will find in nearly all incomplete records questions.

Neil Stein is examiner for Paper 1.1

Friday, March 23, 2007


 

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