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Nepal’s Financial Reporting Requirements Take Shape

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In a move aimed at bringing transparency and accountability to Nepal’s financial reporting, the Accounting Standards Board (ASB) has developed a set of standards that align with International Financial Reporting Standards (IFRSs).

Background

The ASB was established under the Nepal Chartered Accountants Act, 1997. It develops accounting standards based on IFRSs, taking into consideration Nepal’s legal and regulatory environment and the preparedness of stakeholders.

Monitoring and Regulation

The Institute of Chartered Accountants of Nepal (ICAN), a professional organization, is responsible for monitoring and regulating its members to ensure compliance with these standards. The ICAN has also issued notifications setting effective dates for implementation of the new standards.

History of Accounting Standards

  • In 2003, the ASB developed Nepal Accounting Standards (NASs) based on equivalent IFRSs.
  • These standards did not include equivalents to all IFRSs and were operative only for financial statements covering periods beginning on or after July 17, 2008.

Latest Developments

  • In 2013, the ASB finalized another set of accounting standards, known as Nepal Financial Reporting Standards (NFRS), which are based on all IFRSs on issue at that time.
  • The NFRS includes a requirement for entities to make an explicit and unreserved statement of compliance with these standards.

Standard for Small- and Medium-sized Entities

The ICAN has also developed a standard for small- and medium-sized entities, known as the Nepal Financial Reporting Standard for Small- and Medium-sized Entities (NFRS for SMEs).

Effective Dates

  • The effective dates for implementation of the NFRS vary based on the type of entity, ranging from 2014-15 to 2016-17.

Additional Requirements

Entities are also required to apply NFRS 9 Financial Instruments, which is equivalent to IFRS 9, with effect from July 16, 2015.

Objectives

The new standards aim to improve transparency and comparability in financial reporting, making it easier for investors and other stakeholders to make informed decisions.