Regulatory position reviewed as of 7 October 2026
Disclaimer: This article is provided for general informational purposes only and does not constitute legal, tax, accounting, or professional advice. Regulatory requirements may change and should be assessed based on each institution’s specific circumstances and the latest applicable laws and regulations.
Executive Introduction
Educational institutions in Cambodia operate within overlapping regulatory frameworks covering education licensing, accounting, financial reporting, independent audit and taxation. These obligations must be considered separately.
An education licence does not, by itself, exempt an institution from accounting or financial-reporting requirements. Likewise, a tax exemption does not necessarily remove the obligation to maintain accounting records, prepare annual financial statements or obtain an independent audit.
A significant development is Prakas No. 063 FSA.PrK dated 18 August 2026, which introduced revised annual financial-statement filing and independent audit requirements and replaced Prakas No. 563 dated 10 July 2020. The revised audit criteria apply from the 2026 accounting period.
Education institutions must also consider Prakas No. 172 MEF.PrK.GDT dated 20 March 2024 on Tax Incentives for Businesses in the Education Sector, which contains a separate audited-financial-statement condition for qualifying education businesses.
Accordingly, an institution may not meet ACAR's general statutory audit criteria but may still require audited financial statements for tax-incentive, regulatory, donor, lender or contractual purposes.
1. Regulatory Framework
The principal accounting legislation is the Law on Accounting and Auditing, promulgated by Royal Kram No. NS/0416/006 dated 11 April 2016. It establishes requirements concerning accounting records, annual financial statements, accounting periods, language and currency, record retention, independent audit and professional licensing.
Education-sector regulation operates alongside this legislation. Under Article 11 of the Law on Education dated 8 December 2007, educational institutions and training classes must obtain an educational licence before commencing operations.
The applicable obligations therefore depend on the institution's legal form, ownership, licensing status, tax status, public accountability, QIP status, size and whether it operates for profit or as a not-for-profit entity.
No general exemption from the independent-audit requirement is provided merely because an enterprise operates in Cambodia's education sector. Educational institutions must assess their audit obligations under the applicable ACAR criteria, including their legal status, taxpayer classification, turnover, total assets and number of employees. Separate audit requirements may also arise under Cambodia's education-sector tax incentive framework.
2. Accounting and Bookkeeping Obligations
Under Article 20 of the Law on Accounting and Auditing, enterprises and not-for-profit entities are required to maintain accounting records, and accounting transactions must be supported by valid accounting documentation.
For educational institutions, records should appropriately capture tuition fees, registration fees, student deposits, scholarships and discounts, refunds, grants, donations, payroll, fixed assets, leases, related-party transactions and other material activities.
Accounting records must be retained for at least 10 years from their date of creation.
The statutory accounting period is generally 1 January to 31 December. This is particularly relevant to international schools whose academic year may run, for example, from August to June. The academic calendar does not automatically replace the statutory financial year.
The Law also requires accounting records and financial statements to be prepared in the Khmer language and expressed in Khmer Riel, subject to permitted accompanying English-language and foreign-currency versions where applicable.
3. Applicable Financial Reporting Framework
Not all education institutions apply the same financial reporting framework.
A private education company without public accountability may qualify to use Cambodian International Financial Reporting Standards for SMEs (CIFRS for SMEs).
Entities with public accountability may instead be required to apply Cambodian International Financial Reporting Standards (CIFRS).
Cambodia also introduced the Cambodian Reduced Financial Reporting Framework (CRFRF) under Prakas No. 039 dated 20 May 2025. It is available, subject to its eligibility requirements, to entities that are not required to have their financial statements independently audited and do not have public accountability.
Registered not-for-profit educational organisations may fall within the Cambodian Financial Reporting Standard for Not-for-Profit Entities (CFRS for NFPEs) under Prakas No. 335 dated 27 March 2018.
Framework selection must therefore be based on the institution's legal and reporting circumstances rather than simply on whether it operates as a school or university.
4. Annual Financial Statements
Article 17 of the Law on Accounting and Auditing requires enterprises and not-for-profit entities to prepare annual financial statements within three months after the end of the financial year, subject to applicable extension provisions.
Management remains responsible for preparation of the financial statements even where bookkeeping is outsourced or the statements are independently audited.
Preparation of financial statements and filing them with ACAR are separate regulatory obligations.
5. Independent Audit Requirements from 2026
Automatic audit categories
Under Prakas No. 063, certain entities are required to undergo independent audit based on their status rather than ordinary size thresholds. Relevant categories include, among others:
- public enterprises and public-interest entities;
- Qualified Investment Projects (QIPs);
- branches of foreign companies;
- casino enterprises; and
- specified real-estate businesses.
An education project holding QIP status may therefore require an audit regardless of its turnover, assets or employee numbers.
Similarly, a Cambodian branch of a foreign education company falls within the automatic audit category. This should not be confused with a Cambodian private limited company merely because its shareholders are foreign.
General enterprise audit criteria
For enterprises not falling within an automatic audit category, the audit assessment uses a two-out-of-three test.
| Criterion | Statutory Threshold | USD Equivalent |
|---|---|---|
| Annual turnover – commercial sector | KHR 20 billion | USD 5 million |
| Annual turnover – manufacturing activities | KHR 30 billion | USD 7.5 million |
| Annual turnover – service activities | KHR 8 billion | USD 2 million |
| Total assets at year-end | KHR 10 billion | USD 2.5 million |
| Average employees during the year | 100 employees | Not applicable |
An entity must meet at least two of the three applicable criteria: turnover, assets and employees.
Education businesses will ordinarily fall within service activities, making the KHR 8 billion threshold (USD 2 million) particularly relevant.
For example, a school with annual turnover of KHR 9 billion (approximately USD 2.22 million), total assets of KHR 12 billion (approximately USD 2.96 million) and 80 employees meets two criteria and would be subject to independent audit.
A school with KHR 9 billion (approximately USD 2.22 million) turnover, KHR 7 billion (approximately USD 1.73 million) of assets and 70 employees meets only one criterion and would not meet the ordinary size-based test, assuming no other audit requirement applies.
Prakas No. 063 also contains continuation provisions that may cause an entity already subject to audit to remain within the audit requirement even when its position subsequently changes. Audit status should therefore be reassessed annually rather than based only on the current year's thresholds.
6. Not-for-Profit Educational Institutions
Not-for-profit organisations are subject to separate audit criteria.
A specific NPO project with total expenditure exceeding KHR 2 billion (USD 500,000) is subject to independent audit.
At organisation level, an NPO is subject to audit where:
- annual total expenditure exceeds KHR 3 billion (USD 750,000), excluding expenditure of projects already separately audited; and
- the organisation has an average of at least 20 employees during the year.
An NGO-operated school, charitable education foundation or donor-funded training organisation should therefore apply the NFPE rules rather than automatically using the commercial-enterprise thresholds.
7. The Separate KHR 4 Billion Education-Sector Requirement
One of the most important distinctions for education institutions arises under Prakas No. 172 MEF.PrK.GDT dated 20 March 2024.
Education institutions benefiting from the specified education-sector tax incentives must comply with conditions including tax registration, proper accounting, timely tax declarations and submission of audited financial statements to the GDT where annual turnover exceeds KHR 4 billion (approximately USD 988,000).
This threshold is separate from the ACAR statutory audit thresholds.
For example, a school with:
- turnover of KHR 5 billion (approximately USD 1.23 million);
- assets of KHR 7 billion (approximately USD 1.73 million); and
- 60 employees
would not meet two of the three ordinary ACAR criteria. However, because turnover exceeds KHR 4 billion (approximately USD 988,000), audited financial statements may still be required for purposes of maintaining eligibility for the education-sector tax incentives.
Management should therefore perform the ACAR assessment and GDT education-sector assessment separately.
8. Auditor Qualification and Appointment
A statutory audit must be performed by an appropriately qualified and licensed independent auditor.
Cambodia's accounting and auditing legislation and professional regulations require the statutory auditor to satisfy applicable ACAR licensing and KICPAA professional requirements.
The auditor must also comply with applicable independence and ethical requirements and conduct the audit in accordance with auditing standards adopted in Cambodia.
A statutory independent audit must be distinguished from:
- internal audit;
- a GDT tax audit;
- financial inspection;
- accounting review; or
- other assurance or agreed-upon procedures engagements.
Education institutions should appoint their auditor sufficiently early to allow proper audit planning and timely completion before regulatory filing deadlines.
9. Filing Deadlines
Under Prakas No. 063:
- entities not subject to independent audit must file annual financial statements with ACAR within three months and 20 days after year-end; and
- entities subject to independent audit must file their audited financial statements and auditor's report within six months and 20 days after year-end.
For entities with a 31 December year-end, these deadlines are therefore 20 April and 20 July, respectively.
Prakas No. 063 excludes entities classified as small taxpayers from its filing scope. This should not be interpreted as a general exemption from underlying bookkeeping and financial-reporting obligations.
The Prakas also provides financial penalties for late filing, including monthly penalties subject to prescribed caps.
10. Accounting and Tax Interaction
Education-sector tax incentives do not eliminate accounting or tax-compliance responsibilities.
Under Prakas No. 172, qualifying education businesses may benefit from specified exemptions relating to Tax on Income, Prepayment of Tax on Income, Minimum Tax and certain withholding-tax matters, subject to the conditions of the Prakas.
Institutions must nevertheless maintain proper accounting records and comply with relevant tax declarations. Matters such as salary tax, fringe benefits, rental withholding tax, related-party transactions, fixed assets and other non-exempt obligations must continue to be assessed under applicable tax rules.
Financial-statement figures should also be appropriately reconciled with tax declarations.
11. Key Accounting and Audit Risks
Education institutions commonly face heightened accounting and audit risks involving:
- tuition fees collected in advance;
- student deposits;
- registration and enrolment fees;
- revenue recognition across academic periods;
- scholarships, discounts and refunds;
- grants and restricted funds;
- payroll and expatriate staff costs;
- student receivables;
- cash collections;
- school buildings, equipment and leases;
- related-party and intercompany charges;
- foreign-currency transactions; and
- cut-off between academic years and financial years.
For entities using an accrual-based reporting framework, tuition received before educational services are delivered should not automatically be recognised as revenue. Recognition must follow the applicable accounting standard.
Student-management systems, enrolment records, invoices, receipts, bank collections and the general ledger should also be regularly reconciled to support revenue completeness and auditability.
12. Does Your Educational Institution Require an Independent Audit?
Management should assess the following annually:
- What is the institution's legal form?
- Is it for-profit or not-for-profit?
- Is it a QIP, branch, public-interest entity or another automatically audited category?
- What are its annual turnover, total assets and average employee numbers?
- Does it meet at least two applicable Prakas No. 063 criteria?
- If an NFPE, does it meet the separate project or organisation-level criteria?
- Does Prakas No. 172 create a KHR 4 billion (approximately USD 988,000) GDT audit requirement?
- Does a regulator, donor, lender, shareholder agreement or other contract separately require an audit?
The conclusion should be documented annually using the legislation applicable to the relevant financial year.
Accounting and auditing obligations for Cambodia's education sector cannot be determined from a single threshold.
Management must first identify the institution's legal form and applicable financial-reporting framework, then separately assess its ACAR filing obligations, statutory audit status and tax-incentive conditions.
For the 2026 financial year, Prakas No. 063 dated 18 August 2026 is particularly significant. Ordinary service-sector enterprises are assessed using the KHR 8 billion (USD 2 million) turnover threshold, KHR 10 billion (USD 2.5 million) asset threshold and 100-employee criterion under a two-out-of-three test, while QIPs, foreign-company branches and other specified categories may be automatically subject to audit.
Education institutions must additionally consider the separate KHR 4 billion (approximately USD 988,000) audited-financial-statement condition under Prakas No. 172 where they rely on education-sector tax incentives.
The appropriate compliance position should therefore be assessed annually and documented based on the institution's specific legal and operational circumstances.
13. Compliance Matrix — Education Sector in Cambodia
| Compliance Area | Key Requirement | Responsible Authority | Who It Applies To | Key Deadline / Trigger | Main Risk of Non-Compliance |
|---|---|---|---|---|---|
| Education licensing | Obtain the required education licence before commencing operations | Competent education authority | Educational institutions and training providers | Before commencing operations | Regulatory action, penalties or licensing issues |
| Accounting records | Maintain proper accounting records supported by valid accounting documentation | ACAR | Enterprises and not-for-profit entities | Ongoing | Incomplete records, regulatory penalties and audit difficulties |
| Record retention | Retain accounting records for at least 10 years from the date of creation | ACAR | Enterprises and not-for-profit entities | 10-year retention period | Inability to substantiate transactions or respond to regulatory review |
| Annual financial statements | Prepare annual financial statements under the applicable Cambodian reporting framework | ACAR | Enterprises and not-for-profit entities | Within 3 months after financial year-end, subject to applicable extension provisions | Late preparation and subsequent filing non-compliance |
| Financial reporting framework | Apply CIFRS, CIFRS for SMEs, CRFRF or CFRS for NFPEs, as applicable | ACAR | Depends on legal form, public accountability, audit status and other eligibility criteria | Assessed for each reporting period | Incorrect accounting framework and non-compliant financial statements |
| Ordinary enterprise audit test | Meet at least 2 of 3 applicable criteria: turnover, total assets and employees | ACAR | Enterprises not falling within an automatic audit category | Annual assessment | Failure to obtain a required independent audit |
| Service-sector turnover criterion | Annual turnover of KHR 8 billion (USD 2 million) | ACAR | Service-sector enterprises, including education businesses where classified as services | Part of the 2-out-of-3 audit test | Incorrect audit assessment |
| Total asset criterion | Total assets of KHR 10 billion (USD 2.5 million) | ACAR | Enterprises subject to the general audit test | Part of the 2-out-of-3 audit test | Incorrect audit assessment |
| Employee criterion | Average of 100 employees during the year | ACAR | Enterprises subject to the general audit test | Part of the 2-out-of-3 audit test | Incorrect audit assessment |
| Automatic independent audit | Certain entities are subject to audit regardless of the ordinary size test | ACAR | Includes QIPs, branches of foreign companies and other specified categories | Based on entity status | Failure to obtain a mandatory audit |
| NFPE project audit | Independent audit where project expenditure exceeds KHR 2 billion (USD 500,000) | ACAR | Not-for-profit projects | When expenditure exceeds the threshold | Audit non-compliance |
| NFPE organisation-level audit | Annual expenditure exceeds KHR 3 billion (USD 750,000), excluding separately audited projects, and average employees are at least 20 | ACAR | Not-for-profit entities | Annual assessment | Audit non-compliance |
| Education-sector tax incentive audit condition | Submit audited financial statements to GDT where annual turnover exceeds KHR 4 billion (approximately USD 988,000), subject to the conditions of Prakas No. 172 | GDT | Education institutions benefiting from applicable education-sector tax incentives | Annual turnover exceeds threshold | Possible impact on eligibility for tax incentives |
| Auditor eligibility | Statutory audit must be performed by an appropriately qualified, independent and licensed auditor satisfying applicable ACAR and KICPAA requirements | ACAR / KICPAA | Entities subject to statutory independent audit | Before appointment and throughout audit engagement | Invalid or non-compliant statutory audit |
| Unaudited financial statement filing | File annual financial statements with ACAR | ACAR | In-scope entities not subject to independent audit | Within 3 months and 20 days after year-end | Late-filing penalties and compliance exposure |
| Audited financial statement filing | File audited financial statements and auditor’s report with ACAR | ACAR | Entities subject to independent audit | Within 6 months and 20 days after year-end | Late-filing penalties and compliance exposure |
| Tax compliance | Maintain tax registration, accounting records and submit applicable tax declarations notwithstanding available incentives | GDT | Registered education-sector taxpayers, as applicable | According to applicable tax filing requirements | Tax reassessment, penalties and loss of incentive eligibility |
| Annual compliance assessment | Reassess legal form, reporting framework, audit criteria, tax-incentive conditions and other regulatory requirements annually | Management / relevant regulators | All education institutions | Each financial year | Applying outdated thresholds or missing a new audit/filling obligation |
Key Legal and Regulatory References
- Law on Accounting and Auditing, Royal Kram No. NS/0416/006 dated 11 April 2016.
- Law on Education dated 8 December 2007.
- Prakas No. 063 FSA.PrK dated 18 August 2026 on annual financial-statement filing and independent audit requirements.
- Prakas No. 172 MEF.PrK.GDT dated 20 March 2024 on Tax Incentives for Businesses in the Education Sector.
- Prakas No. 039 dated 20 May 2025 on the Cambodian Reduced Financial Reporting Framework.
- Prakas No. 335 dated 27 March 2018 on the Cambodian Financial Reporting Standard for Not-for-Profit Entities.
- Applicable Cambodian auditing standards, professional licensing requirements and code of ethics administered through ACAR and KICPAA.
This article reflects the regulatory position reviewed as of 7 October 2026. USD equivalents not expressly stated in the relevant regulation are approximate and may fluctuate with exchange rates. The statutory KHR amounts should always be used when determining compliance. Institution-specific requirements, particularly those applicable to higher education, TVET, public institutions, specialised licences, donor-funded projects or other regulated education activities, should be assessed separately.
