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Nepal’s Financial Reporting Requirements: A Guide to Public Accountability

In Nepal, financial reporting standards are crucial for ensuring transparency and accountability in business affairs. The Accounting Standards Board (ASB) has developed the Nepal Financial Reporting Standards (NFRS) to provide a common language for financial reporting among businesses.

Who Has Public Accountability?

The following entities have public accountability:

  • Those whose debt or equity instruments are traded in public markets or are in the process of issuing such instruments, excluding listed microfinance institutions without economic significance.
  • Entities that hold assets in a fiduciary capacity (e.g., banks, insurance companies, mutual funds, pension funds, and retirement plans).
  • Government business entities.

Additionally, entities with economic significance may also be considered as having public accountability.

Economic Significance Criteria

The following criteria are used to determine an entity’s economic significance:

  • Loan or borrowings: NPR 50 crore or more.
  • Financial position (balance sheet) total: NPR 100 crore or more.
  • Number of employees: 300 or more.
  • Annual turnover: NPR 100 crore or more.
  • Holding and assets in fiduciary capacity: NPR 50 crore or more.

Adoption Timeline for NFRS

The adoption timeline for NFRS is as follows:

  • Listed multinational manufacturing companies and listed state-owned enterprises with minimum paid-up capital of NPR 5 billion (excluding banks and financial institutions under BAFIA Act 2006): FY 2014/15.
  • Commercial banks, including state-owned commercial banks, and all other listed state-owned enterprises: FY 2015/16.
  • All other financial institutions not covered above, all other state-owned entities, insurance companies, and all other listed companies: FY 2016/17.
  • SMEs as defined and classified by ASB: FY 2078/79 (voluntary).
  • Micro-entities as defined and classified by ASB: FY 2078/79 (voluntary).

Note

The Institute of Chartered Accountant of Nepal has extended the due date for SMEs and non-profit organizations to prepare their financial statements according to NFRS to FY 2020/21.

Important Dates

  • NFRS-9, NFRS-14, NFRS-15, NFRS-16, NFRS-17, and NAS-29 are applicable from 1st Shrawan 2078.
  • The rest of NFRS standards are applicable from 1st Shrawan 2077.