The Cambodian Financial Reporting Standard for Not-for-Profit Entities (CFRS for NFPEs) is a tailored financial reporting framework designed to meet the unique needs of non-profit organizations in Cambodia.
Issued by the National Accounting Council (NAC) in December 2017, under the authority of Article 11, Chapter 4 of the Law on Accounting and Auditing 2016, and aligned with the Law on Non-Governmental Organizations and Associations 2015, this standard aims to improve the quality, transparency, and consistency of financial reporting in the nonprofit sector.
The CFRS for NFPEs responds to a clear need in Cambodia’s regulatory environment for a simplified and standardized approach to financial reporting among not-for-profit organizations (NFPOs), particularly those with limited resources or accounting expertise.
Through this framework, the NAC encourages accountability and transparency in entities that are often entrusted with managing donor funds, providing public goods, or advocating for social change.
Objective and Rationale
The primary objective of CFRS for NFPEs is to enhance financial reporting practices by ensuring reports are understandable, relevant, reliable, and comparable.
The standard is structured to ensure that financial information supports stakeholders—such as donors, government agencies, beneficiaries, and the public—in making informed decisions and assessing the stewardship of resources.
This framework seeks to answer several key questions for users of the financial report:
- Who is the organization, and why does it exist?
- What activities were undertaken during the reporting period?
- What resources were received and how were they used?
- How did the organization fund its operations?
- Is the organization sustainable in the foreseeable future?
The framework is designed to make this information accessible even to users without strong accounting backgrounds, making transparency more widespread and inclusive.
Applicability and Scope
The CFRS for NFPEs applies to not-for-profit entities registered under Cambodian law. These include associations, foundations, charities, faith-based organizations, advocacy groups, and community development entities that reinvest all income in pursuit of social, cultural, educational, environmental, or humanitarian missions rather than distribute profits to members.
The Standard is particularly geared toward NFPEs that are not subject to full IFRS, CIFRS, or CIFRS for SMEs reporting requirements and do not require complex financial instruments or consolidation. It is appropriate for organizations of various sizes, especially those with limited financial sophistication.
Accounting Basis: Cash-Based Approach
One of the fundamental characteristics of the CFRS for NFPEs is its cash-based accounting methodology.
This approach records transactions only when cash is received or paid, as opposed to accrual accounting, which records revenues and expenses when they are earned or incurred.
This cash basis is intentionally chosen due to its simplicity and practicality for smaller nonprofit organizations. It reduces the technical burden while still promoting accountability by clearly showing cash inflows and outflows during a reporting period.
This makes the framework easier to apply, understand, and audit, especially in entities that rely heavily on grants and donations.
Required Components of the Financial Report
Every NFPE that applies this standard must prepare a financial report each year comprising the following three core components:
- Entity Information
This section describes the entity, its purpose, legal structure, registration details, sources of funds, organizational chart, and reliance on volunteers or donations in kind. - Statement of Receipts and Payments
This key statement provides a year-end summary of all the cash received and all the cash paid out. It separates operating from capital transactions and reconciles the cash position from the beginning to the end of the financial year. - Notes to the Financial Report
The notes provide contextual information, disclose accounting policies, report on related party transactions, explain corrections of prior-period errors, and optionally include service performance, resources, and commitments.
Presentation Requirements
The Standard outlines several key presentation principles to ensure transparency and consistency:
- Currency: Reports must be presented in Khmer Riel. Transactions in foreign currencies must be translated using the spot rate on the transaction date.
- Consistency: The format and classification of financial items must remain consistent across periods unless justified by operational changes.
- Comparative Information: Entities must disclose prior year figures to aid in trend analysis.
- No Offsetting: Cash inflows and outflows must be shown separately to present a clear financial picture.
- Internal Consistency: Line items in the financial report must cross-reference and reconcile with relevant note disclosures.
The Statement of Receipts and Payments
This statement forms the core of financial reporting under CFRS for NFPEs. It details all cash received and disbursed and ends with the cash balance available at year-end. The standard specifies two main sections:
1) Operating Transactions: Includes routine income and expenses related to service delivery and administration. Typical operating receipts include:
- Donations and fundraising
- Membership fees
- Grants and subsidies
- Income from goods or services
- Investment income
Operating payments may include:
- Employee and volunteer compensation
- Supplies and materials
- Rent and utilities
- Grants to third parties
2) Capital Transactions: Involves cash used or received for non-operational purposes such as:
- Proceeds from asset sales
- Repayments or drawdowns of loans
- Purchases of equipment or vehicles
Entities may present sub-categories or combine less material line items, but the structure must be sufficient to provide users with meaningful insights.
Notes to the Financial Report
The notes serve to clarify and expand upon the statement of receipts and payments. Mandatory disclosures include:
- Basis of Preparation: Confirmation that reports are prepared using cash basis and in compliance with the Standard.
- VAT Registration: If applicable, disclosure of VAT inputs and outputs.
- Related Party Transactions: Required only if the transactions are significant or on non-standard terms.
- Events After the Reporting Date: Disclosure of any material events that could affect the user’s understanding of the report.
- Error Corrections: Disclosure of significant adjustments related to previous reporting periods.
- Budget Comparison (Optional): Entities may include a comparison with budgeted figures.
- Service Performance (Optional): Narrative and quantitative disclosures of outputs and outcomes for the period.
- Resources and Commitments: Information about bank accounts, receivables, payables, liabilities, and grants with conditions not yet met.
This section is particularly useful for explaining conditions attached to grants, resources held on behalf of others, or restricted-use donations.
Transitional Provisions
The Standard offers flexible implementation pathways:
- Group 1 (New Entities): Entities established during the reporting year need not present comparatives. They must disclose their formation date.
- Group 2 (Continuing Entities): Entities transitioning from another framework can either:
- Adopt CFRS for NFPEs prospectively without comparatives.
- Restate prior year figures for full comparability.
These provisions ensure a smoother transition for entities coming from various accounting backgrounds, including those previously using CIFRS, CAS, or other modified frameworks.
Basis for Conclusions
In developing this Standard, the NAC was guided by the need to:
- Provide a consistent, nationally applicable financial reporting framework for nonprofit entities.
- Address the absence of accounting standards tailored specifically to the nonprofit sector.
- Encourage financial discipline and transparency among organizations entrusted with public or donor funds.
The NAC decided to structure the Standard in a simple, user-friendly format with accompanying templates, examples, and implementation guidance. The goal is to empower even the smallest nonprofit entities to report in a compliant, transparent, and informative manner.
Illustrative Examples
The Standard includes practical examples to guide real-world application, including:
- Grants with Conditions: Reporting when parts of grants are tied to specific deliverables.
- Loan Forgiveness: Proper treatment of debt waived by donors.
- Volunteer Services: Disclosing reliance on unpaid staff.
- Bequests: How to record pledges made via wills.
- Advance Receipts: How to report ticket sales or sponsorships for future events.
- Related Party Transactions: Differentiating between significant and routine transactions for disclosure purposes.
These examples help reinforce proper treatment and build confidence among preparers in applying the Standard accurately.
Conclusion
The Cambodian Financial Reporting Standard for Not-for-Profit Entities represents a critical milestone in enhancing accountability, transparency, and governance in Cambodia’s nonprofit sector. With its cash-based, simplified format and tailored reporting principles, the CFRS for NFPEs bridges the gap between regulatory compliance and operational feasibility for NFPEs of all sizes.
By adopting this Standard, Cambodian not-for-profit organizations are better positioned to meet the expectations of stakeholders, attract donor confidence, and demonstrate responsible stewardship of financial resources. Ultimately, CFRS for NFPEs not only strengthens the financial infrastructure of the third sector but also contributes to the broader goals of good governance and sustainable development in Cambodia.
Herewith the detail of the Standards
Cambodian Financial Reporting Standard for Not-for-profit Entities (CFRS for NFPEs)
To be Issued December 2017
This Standard was issued by National Accounting Council pursuant to article 11 of Chapter 4 of the Law of Accounting and Auditing 2016.
This Standard applies for the purposes of the Law on Non-Government Organization and Association 2015
Cambodian Financial Reporting Standard for Not-for-profit Entities (CFRS for NFPEs)
Cambodian Financial Reporting Standard for Not-for-profit Entities (CFRS for NFPEs) CONTENTS
| Paragraph | |
| Objective | 1 |
| Scope | 2 |
| Standard | 3–5 |
| Effective Date | 6 |
| Appendix A: Specific Requirements | A1–A82 |
| Section 1 Introduction | A1–A3 |
| Section 2: Objective of Reporting and Overview of Reporting Requirements | A4–A21 |
| Users and Their Needs | A4 |
| Objective of Reporting | A5–A6 |
| Required Components of the Financial Report | A7 |
| Presentation of the Entity’s Financial Report | A8–A11 |
| General Information | A12–A14 |
| Comparative Information | A15 |
| Consistency of Presentation | A16–A19 |
| No Offsetting of Amounts | A20 |
| Correction of Errors | A21 |
| Section 3: Entity Information | A22–A24 |
| Purpose and Value to Users | A22 |
| Required Information | A23–A24 |
| Section 4: Statement of Receipts and Payments | A25–A63 |
| Purpose and Value to Users | A25 |
| Format of Statement of Receipts and Payments | A26–A28 |
| Required Information | A26–A27 |
| Optional Information | A28 |
| Receipts | A29–A43 |
| Required Information | A33–A40 |
| Optional Information | A41–A43 |
| Paragraph Payments | A44–A56 |
| Required Information | A44–A55 |
| Optional Information | A56 |
| Bank Accounts and Cash | A57–A60 |
| Required Information | A58–A60 |
| Other Information | A61–A62 |
| Required Information | A61 |
| Optional Information | A62 |
| Section 5: Notes to the Financial Report | A63–A82 |
| Purpose and Value to Users | A63 |
| Required Information | A64–A76 |
| Basis of Preparation | A65 |
| Value Added Tax (VAT) | A66 |
| Correction of Errors | A67 |
| Related Party Transactions | A68–A73 |
| – Explanation | A68–A71 |
| – Requirements | A72–A73 |
| Events After the Reporting Date | A74–A76 |
| Optional Information | A77–A81 |
| – Note to Service Performance | A77–A80 |
| – Note to Resources and Commitments | A81 |
| Additional Information | A82 |
| Section 6: Illustrative Examples | — |
| Section 7: Glossary | — |
| Appendix B: Transitional Arrangements | B1–B4 |
| Objective | B1 |
| Transitional Groups | B2–B4 |
| – Group 1: New Entities | B3 |
| – Group 2: Continuing Entities | B4 |
Objective
- The objective of this Standard is to facilitate financial reporting by not-for-profit entities (NFPs), which shall apply Cambodian Financial Reporting Standard for Not-for-profit Entities (CFRS for NFPEs), by improving the quality and consistency of the information disclosed in financial reports, and to facilitate comparability between entities, and between years for the reporting entity.
Scope
- This Standard applies to not-for-profit entities, which are register under Cambodian Laws.
Standard
- Not-for-profit entities shall prepare a financial report in accordance with the requirements set out in Appendix A and the transitional provisions in Appendix B of Cambodian Financial Reporting Standard for Not-for-profit Entities.
- Cambodian Financial Reporting Standard for Not-for-profit Entities uses cash-based accounting.
- Accompanying this Standard is an explanatory guide containing a template and guidance notes that illustrate the requirements of this Standard (Explanatory Guide A6 Template and Guidance Notes for applying CFRS for NFPEs).
Effective Date
- A not-for-profit entity shall apply this Standard for periods beginning on 1 January 2018.
Appendix A: Specific Requirements
This Appendix contains the requirements for Simple Formal Reporting – Cash (Not-For-Profit). It is an integral part of the Standard.
Section 1: Introduction
A1. This part of the Standard sets out the requirements for the preparation of financial report.
A2. This Standard comprises a number of sections (as shown in the Table of Contents). These refer to specific aspects of reporting. Within each section information is presented in numbered paragraphs to enable cross-referencing within this Standard.
A3. Terms are defined in the Glossary in section 7 to assist with the understanding of this Standard.
Section 2: Objective of Reporting and Overview of Reporting Requirements
Users and Their Needs
A4. The financial report for a not-for-profit entity is designed to provide general purpose information of the entity to those users who require information for accountability, transparency and decision-making.
Objective of Reporting
A5. An entity should prepare a financial report that addresses the following questions:
- “Who are we?” – an overview of the entity;
- “Why do we exist?” – why the entity was established and what it seeks to achieve (outcomes);
- “What did we do?” – what the entity did during the year in providing goods or services (outputs);
- “What did it cost?” – how much was paid to provide goods or services, and to run the entity;
- “How was it funded?” – the sources of cash used to pay for its activities in providing goods or services;
- “When did we do it?” – the period covered by the report, and a comparison of information with previous reporting periods;
- “How did we do our accounting?” – the accounting policies applied; and
- “What do we need to do to continue?” – the ability of the entity to continue achieving its objectives and operating in the foreseeable future. This question can be answered by looking at the financial report as a whole.
A6. The financial report is usually prepared for a financial year (which ends on its “reporting date”). The financial report shall identify and reflect the financial to which it refers, and contain only those receipts and payments that have occurred in that period. It may be prepared for a part year, but this is unusual and occurs only when the entity is formed or ceases to exist during a year, or changes its reporting date.
Required Components of the Financial Report
A7. An entity shall prepare a financial report every financial year with, at a minimum, the following components:
- Entity information which explains what the entity is and why it exists (section 3);
- A statement of receipts and payments showing the cash received and paid by the entity over the year so the net cash surplus or deficit can be calculated for that financial year (section 4); and
- Notes to the financial report explaining some of the amounts shown in the statement of receipts and payments, as well as explaining relevant events affecting the financial year (section 5);
Presentation of the Entity’s Financial Report
A8. The financial report shall present entity’s receipts and payments over the financial year at reporting date in accordance with this Standard.
A9. Where the requirements of this Standard have been followed but more information about particular events during the year is needed in order to give users a full picture of what happened, additional relevant information shall be provided.
A10. Timeliness of reporting is important. The financial report should be provided as soon as possible following the end of the financial year so that the information is useful and relatively current (will be in [Placeholder]).
A11. It is important that the financial report is internally consistent. This is done by cross-referencing each line of a statement to any other information that relates to that line item in the rest of the financial report.
General Information
A12. Each component in the financial report specified in paragraph A8 shall be clearly identified.
A13. An entity’s financial report shall incorporate all the activities of the entity. The financial report shall include the branches or other operating units. If an entity is structured into more than one unit, this is done by collating information from all the branches or operating units and excluding all transactions between the units, identifying the branches or other operating units within the entity in a relatively straightforward manner that is unlikely to mislead users. If unincorporated entities within the entity will need to look at factors such as whether those branches or other operating units are acting as part of the entity, for example by using the entity’s registration number on the NGOs and Association Register.
A14. The following information shall be displayed prominently, and repeated at the top of each page of the financial report:
- The name of the entity that is preparing the financial report;
- The date of the end of the financial year covered by the financial report, or the period to which the financial report applies, as appropriate; and
- The level of rounding used in the presentation of the financial report (as a general rule whole Khmer Riel should always be used, rounding to the nearest thousand may be appropriate for larger entities).
Comparative Information
A15. Although the financial report focuses on the year’s information, comparative information for the previous period shall be included in the statement of receipts and payments and any associated notes to the financial report unless this Standard specifically allows otherwise. Comparative information shall also be provided for the disclosures about related parties in the notes to the financial report. The financial report may contain further comparative information where it is considered useful for users of the report.
Consistency of Presentation
A16. An entity shall prepare its financial report in total amount of receipt and payment. However, the amount of VAT shall be disclosed in the Note to Financial Report if any.
A17. All amounts shall be presented in Khmer Riel. If the entity has transactions, resources or commitments that are not in Khmer Riel, it shall translate these to Khmer Riel as follows:
- Transactions are translated using the exchange rate on the date of the receipt or payment in Khmer Riel; and
- Monetary resources and commitments are translated using the exchange rate at the reporting date.
A17.1 An entity’s functional currency is the currency of the primary economic environment in which the entity operates.
A17.2 The primary economic environment in which an entity operates is normally the one in which it primarily generates and expends cash. Therefore, the following are the most important factors an entity considers in determining its functional currency:
- The currency that mainly influences funds, grants, receipts or sales prices for goods and services (this will often be the currency in which sources of funds, grants or receipts are denominated and settled); and,
- The currency that mainly influences labor, goods, services, resources, and other costs (this will often be the currency in which such costs are denominated and settled);
- An entity shall record a foreign currency transaction, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
A18. An entity shall not change the way the information is presented or the categories of disclosure from one period to the next unless:
- There has been a significant change in the entity’s operations; or
- This Standard requires that the presentation or a category of disclosure is changed.
A19. A change in presentation or categories of disclosure due to the application of paragraph A19 also requires similar changes to the comparative amounts, unless it is impracticable to do so.
No Offsetting of Amounts
A20. Users of the financial report should be given as much relevant information as possible about the entity. Therefore, cash received and cash paid (even if for a similar purpose) shall not be netted off against each other. An example of such gross reporting is required is a school which runs a fair and uses the money to contribute to a local fund to buy a new ambulance for the area. The cash payments associated with running the fair are reported separately from the cash receipts raised from the fair. However, the entity may show the cash receipts less cash payments and the net cash resulting from the fair in the notes to the financial report if it considers that this provides useful information.
Correction of Errors
A21. Significant errors shall be corrected as soon as practicable. Errors arising during the reporting period shall be corrected before the financial report is finalized. Significant errors relating to past periods shall be corrected and disclosed in the current financial report before the report is finalized. No adjustments to past periods are required (see paragraph A67).
Section 3: Entity Information
Purpose and Value to Users
A22. The purpose of the entity information is to summarize for users what the entity does and how it is organized. This information will assist users in their understanding of the entity and help particularly with their interpretation of the financial report.
Required Information
A23. The entity information shall provide general descriptive information about the entity and its activities. This information shall comprise:
- The entity’s name, type of entity;
- The entity’s registration number and Value Added Tax – Tax Identification Number (VAT-TIN);
- The entity’s objective;
- A description of the entity’s organizational chart (including governance arrangements);
- The main sources of the entity’s cash and resources;
- The main methods used by the entity to raise funds;
- The entity’s reliance on volunteers and donated goods or services; and
- Any additional information that is considered essential to users’ overall understanding of the entity.
A24. The amount of detail will depend on the size of the entity and the complexity of its operations.
Section 4: Statement of Receipts and Payments
Purpose and Value to Users
A25. The purpose of the statement of receipts and payments is to report all the cash received by, and all the cash paid out by, the entity during the financial year. The statement provides users with information about the entity’s financial performance, including its receipts, payments and the resulting cash surplus or deficit generated during the financial year.
Format of Statement of Receipts and Payments
Required Information
A26. The statement of receipts and payments shall be presented as follows:
| XX | |
| Operating receipts (by category) | XX |
| Less operating payments (by category) | (XX) |
| Operating surplus or (deficit) | XX |
| Add capital receipts (by category) | XX |
| Less capital payments (by category) | (XX) |
| Increase or (decrease) in cash | XX |
| Difference on currency translation | XX/(XX) |
| Plus, bank accounts and cash at the beginning of the financial year | XX |
| Total bank accounts and cash at the end of the financial year | XX |
| Represented by: | |
| Bank account(s) | XX |
| Term deposit(s) | XX |
| Cash on hand (includes petty cash) | XX |
| Total bank accounts and cash at the end of the financial year | XX |
A27. Entities shall include only applicable line items. A line item is not required if the entity does not have any entries for that line item.
Optional Information
A28. Additional line items, headings and subtotals may be presented in the statement of receipts and payments when this will help users to understand the entity’s financial report.
Receipts
A29. Receipts comprise all money received during the financial year. This includes notes, cheques and other funds deposited into the entity’s bank accounts.
A30. Receipts can come from various sources, for example, public donations, grants from National Charitable Entities, donations and fees from members, funding for the provision of goods or services (including government contracts) and sales of goods or services (excluding trading receipts from commercial activities).
A31. Receipts can also vary in their nature. Most receipts will relate to the normal operating activities of the entity, for example, receipts from a fundraising event. However, some receipts might result from transactions of a capital nature, for example, receipts from the sale of a building or fundraising. In order to provide useful information to users, receipts are therefore categorized either as operating receipts or as capital receipts.
A32. Entity shall disclose all significant receipt in kinds.
Required Information
A33. Receipts shall be recorded on the receipt of cash, either in a bank account or as physical money received by the entity. For example, a donation shall be recorded on the date it is received, even if it is banked on a later date. Where cash received relates to a future period, relevant disclosures shall be included in the notes to the financial statements (see example 1 in section 6).
A34. Transfers of principal amounts between bank accounts of the entity, or from the maturity of term deposits, shall not be recorded as receipts as they involve only the movement of cash within the entity, not the generation of a receipt. However, any interest received shall be recorded as a receipt.
A35. In order to make information understandable to users, receipts shall be aggregated and presented separately in categories. At a minimum, the following aggregated categories shall be reported separately:
Operating receipts:
- Donations, fundraising and other similar receipts;
- Fees, subscriptions and other receipts from members;
- Receipts from providing goods or services; and
- Interest, dividends and other investment income receipts.
Capital receipts:
- Receipts from the sale of resources; and
- Receipts from borrowings.
A36. Category (a) above includes grants and donations received from the public and various other organizations, for example, national or sub-national administration, charitable trusts, foundations and national charitable entities. It also includes any receipts from fundraising activities. Grants received from the government or other agencies that are in substance a contract for the delivery of goods or services would be included in category (c) above; any receipts from members, including donations, would be included in category (b).
A37. Category (e) above (the sale of resources) includes the sale of physical assets, and the sale of any investments such as shares or bonds.
A38. Entities need report only the minimum categories specified in paragraph A35 separately when the category is applicable and significant to the entity.
A39. The minimum categories described using terminology appropriate for the entity and need not use the titles used in paragraph A35, provided that the separate categories are still maintained.
A40. If there is difficulty in determining the category that should be used for a particular transaction, the entity shall make its best estimate of the appropriate classification. This classification shall then be used consistently in future periods so that the information reported is comparable over time.
Optional Information
A41. The minimum categories specified in paragraph A35 may be disaggregated, or additional categories may be presented, in the statement of receipts and payments when such presentation will enhance the user’s understanding of the entity’s financial performance. Possible disaggregated or additional categories are listed below:
Operating receipts:
- Donations from the public;
- Fundraising receipts;
- Grants not directly related to service delivery;
- Fees and subscriptions from members;
- Donations or offerings from members;
- Receipts from grants or contracts for service with national or sub-national administration;
- Receipts from grants or contracts for service with non-governmental agencies;
- Receipts from sales to the public;
- Receipts from sales to members;
- Receipts from commercial activities;
- Lease or rental receipts;
- Interest and dividend income receipts; and
- Other operating receipts
A42. Disaggregated or additional categories should be used only where doing so is necessary to provide users with an understanding of the main sources of receipts by the entity. Too many categories can make it difficult for users to understand the receipt structure. The number of disaggregated or additional categories used should therefore be limited to those that are really necessary.
A43. Breakdowns of the minimum categories, or the disaggregated or additional categories, may be provided in the notes to the financial report. For example, fundraising from the public may be further disaggregated by fundraising campaign or type, such as by direct collection, postal appeal, raffle or charity auction. The entity may also elect to include in the notes to the financial report a list of donors or grant providers, together with a summary of their contributions, if this is considered useful information. The objective is to provide a breakdown that gives the most useful information to users of the financial report.
Payments
A44. Payments comprise all money paid during the financial year by cash, cheque, bank transfer or other methods.
A45. Payments can be either operating payments (relating to day-to-day activities) or capital payments (relating to the purchase of resources or the repayment of borrowings).
Required Information
A46. Payments shall be recorded on the date that the payment is made. For example, a payment shall be recorded when a cheque is issued to the recipient, rather than the later date when the cheque is presented and the money withdrawn from the bank account.
A47. Internal transfers of principal amounts from one bank account to another, or for investment in term deposits, shall not be recorded as payments as they involve only the movement of cash not the disbursement of cash.
A48. In order to make information understandable to users, payments shall be aggregated and presented in categories. At a minimum, the following aggregated categories shall be reported separately:
Operating Payments:
- Payments related to public fundraising;
- Volunteer and employee related payments;
- Payments related to providing goods or services; and
- Grants and donations paid.
Capital Payments:
- Purchase of resources; and
- Repayment of borrowings.
A49. Category (e) above (the purchase of resources) includes the purchase of physical assets, and the purchase of any investments such as shares or bonds.
A50. Entities need report only the minimum categories specified in paragraph A48 separately when the category is applicable and significant to the entity.
A51. The minimum categories described using terminology appropriate for the entity and need not use the titles used in paragraph A48, provided that the separate categories are still maintained.
A52. If there is difficulty in determining the category that should be used for a particular transaction, the entity shall make its best estimate of the appropriate classification. This classification shall then be used consistently in future periods so that the information reported is comparable over time.
A53. Reimbursements for expenses incurred by employees on behalf of the entity (for example, reimbursing an airfare for an employee) shall not be classified as employee payments but in the appropriate category of payments (for example, payments relating to providing goods or services if that was the reason for the reimbursed airfare).
Optional Information
A54. The minimum categories specified in paragraph A48 may be disaggregated, or additional categories may be presented, in the statement of receipts and payments when such presentation will enhance users’ understanding of the entity’s financial performance. Possible disaggregated or additional categories are listed below:
Operating payments:
- Administration and overhead payments;
- Lease and rental payments;
- Affiliation fees;
- Interest payments; and
- Program/Project by activities.
- Other operating payments.
A55. Disaggregated or additional categories should be used only where doing so is necessary to provide users with an understanding of the main payment types of the entity. Too many categories can make it difficult for users to understand the payment structure. The number of disaggregated or additional categories used should therefore be limited to those that are really necessary.
A56. Breakdowns of the minimum categories, or the disaggregated or additional categories, may be provided in the notes to the financial report. For example, employee related payments could be disaggregated into salaries and wages, and other staff costs (including employer’s contributions to NSSF benefits). The objective is to provide a breakdown that gives the most useful information to users of the financial report.
Bank Accounts and Cash
A57. Bank accounts and cash comprise petty cash, any other cash on hand at reporting date, cheque accounts, deposits held at call with banks and other financial institutions, bank overdrafts, term deposits and restricted cash.
Required Information
A58. Bank accounts and cash shall be recognized at the amount actually held. However, bank account balances shall be adjusted to reflect amounts deposited but not yet shown on the bank statement, or cheques that have been issued but not yet presented to the bank (commonly referred to as unpresented cheques).
A59. As a minimum, the following aggregated categories shall be reported separately:
- Bank accounts;
- Term deposits; and
- Cash on hand.
A60. Entities need report only the minimum categories separately when the category is applicable and significant to the entity.
Other Information
Required Information
A61. The statement of receipts and payments shall include any additional information that is considered necessary for users to understand the financial performance of the entity.
Optional Information
A62. An entity may include the entity’s budgets or plans for the current financial year if they are available.
Section 5: Notes to the Financial report
Purpose and Value to Users
A63. The notes to the financial report contain information that expands on the information included in other parts of the financial report as well as providing additional relevant information. This is designed to provide users with a greater understanding of the information reported in the statement of financial position, receipts and payments and information related to service performance and resources and commitments.
Required Information
A64. The following matters shall be included in the notes to the financial report.
Basis of Preparation
A65. The notes to the financial report shall disclose:
- The entity is permitted by law to apply this Standard; and
- All transactions are reported in the statement of receipts and payments and related notes to the financial report on a cash basis.
Valued Added Tax (VAT)
A66. The notes to the financial report shall disclose:
- Whether the entity is registered for VAT; and
- Total amount of VAT input and VAT output for the period if any.
Correction of Errors
A67. The notes to the financial report shall disclose significant errors relating to past periods that have been corrected in the current financial report.
Related Party Transactions
Explanation
A68. A related party transaction is a transfer of money or other resource between the reporting entity and a person or other entity that is closely associated with the reporting entity. This includes significant normal business transactions as well as transactions below the market price (including the provision of free goods or services).
A69. Related parties comprise:
- People that have significant influence over reporting entity (such as officeholders, committee members or others that are involved in the strategic management of the entity – whether employed or voluntary) and close members of their families; and
- Other entities that have significant influence over reporting entity.
A70. Disclosure of related party relationships and related party transactions is necessary for accountability purposes, and to enable users to better understand the entity’s financial report. This is because:
- Related party relationships can influence the way in which an entity operates with other entities;
- Related party relationships might expose an entity to risks or provide opportunities, that would not have existed in the absence of the relationship; and
- Related parties may enter into transactions that unrelated parties would not enter into, or may agree to transactions on terms and conditions that differ from those that would normally be available to unrelated parties.
A71. Examples of transactions with a related party that would meet those criteria and therefore would be disclosed are:
- The sale of a significant resource (such as a building) to the spouse of a member of the governing body of the entity;
- The provision of preferential access to services provided by the entity to the child of the president of the entity;
- The provision of finance (including loans, grants and guarantees), for example, a low interest loan to a related party; and
- A member of the governing body providing professional services (e.g. accounting or legal services) to the entity at no cost.
Requirements
A72. An entity shall disclose in the notes to the financial report, transactions with a related party that have occurred during the financial year if:
- The transaction is significant to the entity (individually or in aggregate with similar transactions); or
- The transaction is either significant or insignificant and is on terms and conditions that are likely to be different from the terms and conditions of transactions in similar circumstances between parties that are not related.
A73. For each transaction disclosed the following shall be reported: (will check with CIFRS for SME)
- A description of the related party relationship;
- A description and the amount of any receipts or payment (and the value of free goods or services provided) related to the transaction during the financial year; and
- Any amounts due from or to related parties at reporting date.
Events After the Reporting Date
A74. Events after the reporting date are those significant events, both favorable and unfavorable, that occur between the reporting date and the date when the financial report is finalized for approval.
A75. An entity shall report the following for each significant event after reporting date:
- The nature of the event;
- An estimate of any associated receipts, payments, resources or commitments; and
- How, if at all, the event is likely to affect the continuing viability of the entity.
A76. An example of an event requiring disclosure is a fire which destroys the premises of a charity a week after reporting date. The financial report would report that the fire had occurred, the extent of the damage that resulted, the extent to which the damage is covered by insurance, and the likely impact on the charity’s activities in both the short and long term.
Optional Information
Note to Service Performance
A77. Service financial reporting is based around two elements:
- Outcomes: what the entity is seeking to achieve in terms of its impact on society; and
- Outputs: the goods or services that the entity delivered during the year.
A78. Note to service performance may report the entity’s outputs and outcomes that the entity is seeking to influence.
A79. In reporting the entity’s outputs, note to service performance shall describe, and quantify to the extent practicable, the outputs (goods or services) the entity has delivered for the current year.
A80. Note to service performance need include only the outputs that are significant to the performance of the entity.
Note to Resources and Commitments
A81. Note to Resources and Commitments shall comprise:
(a) Schedule of Resources;
In order to make information understandable to users, resources shall be aggregated and presented in categories. As a minimum, the following aggregated categories shall be separately reported: Bank accounts and cash, Money held on behalf of others, Money owed to the entity; and other resources.
(b) Schedule of Commitment;
In order to make information understandable to users, resources shall be aggregated and presented in categories. As a minimum, the following aggregated categories shall be separately reported: Money payable by the entity, other commitments, and guarantees.
(c) Schedule of Other Information.
- If the entity has received a grant or donation with conditions attached, and those conditions have not been fully met at reporting date, it shall report information about the amount of the grant or donation; the conditions for which compliance has not been fully met; and the purpose and nature of the condition; and an indication of the condition(s) has or has not been met.
- If the entity has charged any of its resources as security for borrowings, it shall report information about the nature and amount of the borrowing that is secured; and the nature and amount of the resource(s) used as security.
Additional Information
A82. The notes to the financial report shall include any additional information that the entity considers necessary for users to understand the overall financial performance and position of the entity.
Section 6: Illustrative Examples
The following are examples of the accounting treatment required in the financial report.
1. Grant with Conditions
A grant of R 6,000,000 was made by the local council to a food bank (the reporting entity). R 2,000,000 was a contribution towards the purchase of a refrigerator for the storage of perishable items, and R 4,000,000 for buying food for distribution. The agreement requires the grant to be spent as specified or be returned to the local council. At the end of the year, the refrigerator had been purchased but only half the food.
Treatment: The reporting entity records:
- In the statement of receipts and payments the entire amount of the grant when received (as an operating receipt: donations, fund raising and other similar receipts).
- In the statement of receipts and payments, the R 2,000,000 that has been spent on the refrigerator (as a capital payment); and the R 2,000,000 spent on the food (as an operating payment: payments related to providing goods or services).
- In the schedule of resources in the note to financial report, the refrigerator and its purchase value (cost).
- In the schedule of other information in the note to financial report, the following: the total amount of the grant, the fact that a condition of the grant is that it only be used to purchase a refrigerator and buy food for distribution, and the fact that R 2,000,000 of the grant has not yet been spent on food for distribution at year end.
Optional Information: The entity may wish to include information about the grant provider in any list of grant providers and their contributions included in the notes to the financial report. (see paragraph A41)
2. Loan Forgiveness
- A government agency lends an entity R 40,000,000 to enable the entity to buy a van.
Treatment: The loan is recorded in the statement of receipts and payments as a capital receipt on receipt of the funds (see paragraph A35). Future repayments are recorded in the statement of receipts and payments as a capital payment when they are made, and the amount owing at each reporting date is recorded in the note to financial report.
- After a change in policy, the government agency decides not to require repayment of the loan. There are no conditions attached to this decision.
Treatment: The entity removes the loan from the schedule of commitments in the note to financial report.
Optional Information: The entity may wish to record in the notes to the financial report the reason it no longer has the loan recorded in its schedule of commitments. (see paragraph A82).
3. Volunteer Services
The reporting entity is a charity shop run by volunteers.
Treatment: The entity information section reports that the entity is reliant on time of volunteers, and the donation of goods for resale for the operation of the charity shop (see paragraph A23(f)).
Optional Information: In its note to financial report (note 9.2) the entity may provide a quantification of the contributions from volunteers in terms of numbers of volunteers, number of volunteer hours or full-time staff equivalents involved in running the shop.
4. Bequests
A client (who is not a related party) of a registered charity advises that she has named the charity as the beneficiary of R40,000,000 in her will, and that the money is to be used for a specified purpose.
Treatment: There is no recording of the bequest when the will is made, or upon the death of the benefactor. The cash receipt is recorded in the statement of receipts and payments as an operating receipt when the cash from the bequest is received. Any conditions attached to the bequest are reported in the note to financial report (once the bequest is received).
Optional Information: In the periods between when the charity is named in the will and the bequest is received, the entity may wish to record in the additional notes to the financial report the fact that they have been named as a beneficiary.
5. Receipts for a future activity
An entity has received ticket monies for a ball it is going to hold in the next financial year as a fundraiser.
Treatment: Ticket monies received are recorded as an operating receipt in the statement of receipts and payments. The entity also reports in the note to financial report that it has committed to holding a ball as a fundraising activity and that it has received R4,000,000 in ticket monies in advance of this have been recorded as an operating receipt and are held in the entity’s bank account. (see paragraph .A33)
6. Related Parties
Scenario 1
The reporting entity has total operating payments of R 20,000,000; these payments are all made to the spouse of the chairman for office administration duties of the entity; the payments are made on normal terms and conditions.
Scenario 2
The reporting entity has total operating payments of R 20,000,000; a few of these payments (R200,000) are made to the spouse of the chairman for relieving the office administrator; the payments are made at the same hourly rate as the office administrator receives.
Treatment: In both of the scenarios above the spouse of the chairman is a related party of the entity (see paragraph A69(a))
In scenario 1 the transactions with the related party whilst on normal terms and conditions are significant to the entity (see paragraph A72(a)) and therefore the entity reports in the notes to the financial report the information set out in paragraph A73 (a) – (c).
In scenario 2 the transactions with the related party are not significant to the entity and therefore the entity is not required to report these transactions in the notes to the financial report.
Section 7: Glossary
This Glossary contains terms used in this Standard.
Reporting date:
The end of the latest period covered by financial statements or by an interim financial report.
Capital payment:
A payment during the financial year for the repayment of borrowings, or the purchase of a resource with an expected life of greater than twelve months (such as the purchase of a computer by the entity) to be owned or partly owned and used by the entity to support the entity’s activities or to provide goods or services. Capital payments do not include payments for operating purposes or payments for resources to be passed to other entities.
Capital receipt:
A receipt during the financial year from borrowings or from cash received on the sale of a resource with an expected life of greater than twelve months.
Commitments:
Commitments comprise amounts owed by the entity (commonly referred to as liabilities), and legal obligations to make payments at a future date.
Entity:
An organization which may take any of a number of forms, including but not limited to, registered charity, company, incorporated association, unincorporated association or trust. Depending on organizational structure, this may be a legal entity, a unit within a wider organization, or it may comprise one or more units.
Financial report:
A set of statements which collectively tell the story of the reporting entity over the financial year. This includes the entity information, statement of service performance, statement of receipts and payments, statement of resources and commitments, and notes to the financial report.
Honoraria:
Payments made for services provided where no fixed payment would normally be made. Volunteers and employees can receive honoraria.
Not-For-Profit Entities:
A type of organization that does not earn profits for its owners. All of the money earned by or donated to a not-for-profit entity is used in pursuing the organization’s objectives and keeping it running. Typically, not-for-profit organizations are charities or other types of public service entities.
Notes to the financial report:
Notes that provide further information on items in the various financial statements, either by a further breakdown of figures or a narrative description.
Note to resources and commitments:
A summary of the significant resources and commitments explaining the financial position of the entity at reporting date.
Note to service performance:
Note that provides information on outputs delivered by the entity during the financial year and is particularly useful in the not-for-profit sector when the focus is on achieving planned outputs and outcomes, rather than making a profit. The information in this statement is predominantly non-financial, but still involves measurement.
Operating payment:
Any payment, other than a capital payment, made by the entity during the financial year.
Outcomes:
What the entity is seeking to achieve in terms of its impact on society.
Outputs:
The goods or services that the entity delivered during the year.
Payments:
Payments comprise all money paid during the financial year by cash, cheque, bank transfer or other method. Payments can be either operating payments (relating to day-to-day activities) or capital payments (relating to the purchase of resources or the repayment of borrowings).
Receipts:
Receipts comprise all money received during the financial year. This includes notes and coins, cheques and other funds deposited into the entity’s bank accounts. Most receipts will relate to the normal operating activities of the entity (for example, receipts from a fundraising event). However, some receipts might result from transactions of a capital nature (for example, receipts from the sale of a computer or from borrowings).
Resource:
An economic or productive factor required to accomplish an activity, or as means to undertake an enterprise and achieve desired outcome including land and buildings, labor, capital, vehicles, computer (software), furniture and fitting, and office equipment.
Related party:
People or entities that have significant influence over the entity, such as officeholders, committee members, or others that are involved in the strategic management of the entity (whether employed or volunteer) and close members of their families.
Reporting entity:
An entity preparing a financial report in accordance with this Standard. In Cambodia reporting environment it is an organization that is required by law, or elects to apply, standards issued by the National Accounting Council (NAC). For the purposes of applying this Standard, the entity is a not-for-profit entity.
Significant:
An item is significant if disclosure of the particular item, whether financial or non-financial, could influence a user’s understanding of the entity’s overall performance. For the purposes for this Standard, it has the same meaning as material.
Statement of receipts and payments:
A summary of all the cash received by, and all the cash paid out by, the entity during the financial year.
Appendix B: Transitional Arrangements
This Appendix contains the requirements for entities to transition to Cambodian Financial Reporting Standard for Not-for-profit Entities (CFRS for NFPEs). It is an integral part of the Standard.
Objective
B1. This part of the Standard is designed to assist an entity in preparing its first financial report under this Standard. This Standard recognizes that entities come from divergent reporting backgrounds and prescribes different transitional rules to meet different circumstances.
Transitional Groups
B2. There are two types of entities applying this standard for the first time:
- (a) Group 1: New Entities – entities that are established in the current financial year; and
- (b) Group 2: Continuing Entities – entities that have not followed this Standard in the previous reporting period, but have been operating prior to the current financial year. This includes entities that have been applying other accounting standards in the previous financial year, for example, Cambodian Accounting Standards (CAS), CIFRS, CIFRS for SMEs, and other related accounting frameworks.
Group 1: New Entities
B3. No comparative figures are required for this group. This overrides any requirement elsewhere in this Standard for comparatives to be reported. New entities shall disclose their date of commencement in the notes to the financial report.
Group 2: Continuing Entities
B4. These entities shall either:
- Follow this Standard from the start of the current period. In this case, comparative information is not required to be provided and this overrides any requirement elsewhere in this Standard for comparatives to be reported. The first-time adopter that chooses not to restate the comparative information shall disclose that fact.
- Follow this Standard from the start of the previous period by restating the entity’s previous financial statements (if any) in accordance with the requirements of this Standard. This means that the current year’s figures and the prior year’s comparative figures will be provided on the same basis.
Basis for Conclusions
BC1. This Basis for Conclusions summarizes the considerations of National Accounting Council (NAC) in developing the Cambodian Financial Reporting Standard for Not-For-Profit Entities (CFRS for NFPEs).
Background
BC2. The CFRS is an important element for the Not-For-Profit Entities (NFPE) work program. The CFRS for NFPEs is developed under cash-based accounting issued by NAC following the Ministry of Economy and Finance’s working group on researching and drafting accounting standards for Not-For-Profit Entities where appropriate to apply for NFPE permitted by laws and regulations of the Kingdom of Cambodia.
BC3. On this basis, CFRS for NFPEs contains a framework, template and guidance on financial reports for Not-For-Profit Entities.
Objective
BC4. This standard is intended to improve the quality and consistency of financial reporting by entities to apply the CFRS for NFPEs, and to encourage the new entities which are newly established and the entities that do not have proper accounting standards for use to prepare financial reports.
Approach
BC5. NAC decided that CFRS for NFPEs shall be a single, short and simple cash-based accounting written in less technical language than is normally found in accounting standards. As a result, CFRS for NFPEs is applicable for NFPEs in Cambodia.
BC6. The CFRS for NFPEs is considered to be important in providing information related directly to the financial report as this provides useful information for accountabilities and decision-making by users of financial reports.
Financial Information
BC7. This Standard establishes minimum aggregated categories for the reporting of financial information. It also allows an entity to add additional categories applicable to that entity and to describe all categories using terminology appropriate to that entity. In doing so, NAC was seeking to achieve a balance between comparability and understandability on the one hand, and flexibility for entities to reflect their own circumstances on the other.
Non-Financial Information
BC8. To enhance financial reporting with non-financial information that explains the activities of the entity, CFRS for NFPEs allows disclosing this information optionally in the note to the financial report which require:
- (a) Disclosure of information about the entity’s structure and objectives, together with disclosure of the entity’s achieving planned outputs and outcomes, rather than making the profit and the significant resources and commitments explaining the non-financial information of the entity at reporting date; and
- (b) The preparation of notes to service performance, and resources and commitment.
Related Parties
BC9. The definition of a related party in existing accounting practice includes both people (such as officeholders, committee members, or others that are involved in the strategic management of the entity and close members of their families) and other entities that have significant influence over the entity.
BC10. However, disclosure of related party transactions is required only if the transaction is significant to the entity (individually or in aggregate with similar transactions), or the transaction is on terms and conditions that are likely to be different from the terms and conditions of transactions in similar circumstances between parties that are not related.
Note to Financial Report
BC11. To enhance financial reporting with financial information that explains the activities of the entity, CFRS for NFPEs contains the three main points such as required information, optional information and additional information.
Transition
BC12. NAC was also concerned that some of those entities that have already applied cash modified or accrual basis accounting might have difficulty converting to a cash-based standard. Rather than delay the application of this standard, CFRS for NFPEs permits entities to either:
- (a) Apply CFRS for NFPEs for the entities that do not have proper accounting standards or already applied another cash basis accounting standard; but for those entities that already applied cash-modified or accrual accounting standards are able to submit their financial report to NAC.
- (b) Apply CFRS for NFPEs from the start of the previous period by restating the entity’s previous financial statements (if any) in accordance with the requirements of CFRS for NFPEs.
