Research Paper: Influence of the French Accounting System on a Former French Colony

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¶ … French Accounting System on Cambodia

Cambodia stands out from its Southeast Asian neighbors by virtue of its unique history as a French colony and the fact that its accounting profession was virtually destroyed during the turbulent years following its independence at the hands of Pol Pot and the bloodthirsty Khmer Rouge regime. Consequently, the modern accounting profession in Cambodia was started with a tabla rasa, and it is reasonable to suggest that any legacy of the French colonial period would manifest in the practices that emerged in the years since independence. After all, the Cambodians were required to rely on some proven accounting methods to satisfy their trade relationships with other countries. To gain some fresh insights in this area, this paper provides a review of the relevant literature to trace the impact of French accounting to its former colony, Cambodia, to determine the extent to which it has moved away from French accounting and why. A summary of the research and important findings are presented in the conclusion.

Review and Analysis

With a colorful, robust and violent history that dates to antiquity, Cambodia also enjoys a wide range of natural resources that predates the arrival of the French. Nevertheless, many of the very same issues that created divisiveness in the Cambodia of old are the same ones facing the country's current leadership. Competition over scarce resources among and between competing fiefdoms and kingdoms have always kept Cambodia at odds with its neighbors, and these same issues face the country today. For instance, U.S. security analysts report that, "The major economic challenge for Cambodia over the next decade will be fashioning an economic environment in which the private sector can create enough jobs to handle Cambodia's demographic imbalance" (Cambodian economy, 2012, p. 3). Across the board, Cambodia ranks low on many of the developmental metrics that would indicate future economic growth is likely, rather than a continuation of the existing fragile political economy that exists. In this regard, security analysts with the U.S. government also emphasize that, "More than 50% of the population is less than 25 years old. The population lacks education and productive skills, particularly in the poverty-ridden countryside, which suffers from an almost total lack of basic infrastructure" (Cambodian economy, 2012). This lack of basic infrastructure is a legacy of the Pol Pot and Khmer Rouge regime which killed all accountants or caused them to flee for their lives following their accession to power. The French presence in Cambodia can be traced to 1863 when the Cambodian king requested French protection; in 1887, the country became a part of French Indochina (Cambodia, 2012). Cambodia was occupied by Japan during World War II, but was reclaimed by France thereafter and it was not until 1953 that Cambodia gained full independence from France (Cambodia, 2012).

The king placed the country under French protection in 1863 and it became part of French Indochina in 1887. Following Japanese occupation in World War II, Cambodia gained full independence from France in 1953 (Cambodia, 2012). In the years that followed its independence, French influence on the accounting profession and practices can be discerned in numerous areas, but most authorities appear to agree that there was a lack of a cohesive set of practices that could be described as a "Cambodian accounting system." For instance, Yapa (2000) reports that, "Professional institutions in Europe and the UK were clearly a product of existing cultures, institutions and values. It is also clear that institutions in developing, emergent and (post) colonial countries were a product of financial, political and colonial influences" (p. 3). Moreover, even given the influence that France exerted during its colonial days, this influence was basically washed away in the sea of blood the followed the Khmer Rouge's accession to power. According to Yapa, "Given that many of the institutions and structures derived from the French colonial influences in Cambodia were destroyed by the Khmer Rouge or undermined by the indirect Chinese government, Cambodia provides an example as close to a blank-slate as is achievable in the real world, to explore how a profession actually emerges in a contemporary setting" (2000, p. 3).

Notwithstanding some modest progress in this area in recent years, Cambodia still languishes behind many of its neighbors in competing in an increasingly globalized marketplace. For instance, Yapa reports that, "In recent years, Cambodia has gained accession to the World Trade Organization (WTO) and has emerged as an increasingly important actor in Southeast Asia and in trade given its geographic location in the lower Mekong region between Thailand in the west, Viet Nam in the east, and Lao PDR in the north" (2000, p. 7). Nevertheless, Cambodia is still an impoverished nation where most of the population remains tied to the soil with little prospects for economic development and diversification in the future. Indeed, Yapa emphaizes that, "Cambodia ranks as one of the poorest countries in the world. There have been relatively few studies of the role and place of accounting among the poor" (Yapa, 2000, p. 7).

A useful description of the French accounting system is provided by Levant and Nikitin who report in the French accounting system, "The integration of financial and cost accounting was quite 'natural' up until the 1940s. After that date, State-imposed standardization of financial accounting led to separation of the two types of accounting" (2012, p. 439). Applying this definition to the accounting system that emerged following Cambodia's independence would be disingenuous, though, given the lack of a cohesive set of national accounting practices, but the French influence is discernible nonetheless. For example, Wusterman (2004) reports that, "Traits of French corporate governance suggest, that from a broad perspective, the role of accounting in the French financial system is placed somewhere between the role attached by the German and the U.S. financial systems to its accounting systems, respectively" (p. 5). Indeed, Wusterman suggests that it is difficult to codify a French accounting system that satisfies all authorities. For example, Wusterman notes that, "In contrast to the German accounting system that is supposed to ensure its key financing parties to be adequately informed to exert control, the institutional traits of the French financial system suggest that the role of accounting in France is a more ambiguous issue" (p. 35).

Many authorities, though, do seem to agree that the influence of French accounting practices during the colonial period were largely related to profit maximization at the local level rather than as part of any larger, coherent set of accounting practices. For instance, French influence in Cambodia extended well into the post-World War II era, and its legacy can be discerned throughout the country is various ways, including its accounting system. According to Roche (1986), "Obviously the initial obstacle [to independence in Indochina] was French power, but France under the Fourth Republic was suffering from internal divisions and had never psychologically recovered from its abject defeat in 1940. In the U.S. State Department, Indochinese matters were not transferred from the French to the Southeast Asian bailiwick until the 1950s" (p. 26).

Indeed, the legacy of the French influence on the accounting profession and practice can be discerned in modern applications despite the localized variations that may be involved. For instance, prior to 1953, the legal system in Cambodian followed the French civil code and judges (Yapa, 2000, p. 16). According to Black's Law Dictionary, the Code Civil is "the code which embodies the civil law of France. It was promulgated in 1804. When Napoleon became emperor, the name was changed to Code Napoleon by which it is still often designated although it is now official styled by its original name of Code Civil" (p. 257). The accounting system that was part and parcel of this code was applied in a strictly pragmatic fashion during the colonial era. For instance, Yapa (2000) reports that in Cambodia, "The political system was considered a French protectorate and the political power was held by the French. During this period the French colonial policy was to exploit the Cambodian natural resources to supply materials for French trading activities. There was no need for an indigenous accounting profession and commercial accounting in Cambodia" (p. 16).

This paucity of need for local accounting talent was directly related to the fact that these professional positions were held by expatriates from France. In this regard, Yapa (2000) adds that, "The accounting record keeping was performed for basic commercial activities by French accountants rather than locally trained professionals. Under French colonial rule no law defining accounting and auditing system for private enterprises was established" (p. 2000). Therefore, the influence of the French accounting system on the still-developing nation of Cambodia was less prominent during the years of the Khmer Rouge regime simply because there was no commerce to speak of. For instance, Yapa also emphasizes that, "Throughout the period, of the Khmer Rouge and the Vietnamese occupation in Cambodia (1975 to 1989), there was a centrally planning communist regime which had no need for a commercial accounting… [END OF PREVIEW]

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"Influence of the French Accounting System on a Former French Colony."  Essaytown.com.  October 2, 2012.  Accessed September 19, 2019.
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