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Nepal

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Financial reporting framework in Nepal

Under the Nepal Chartered Accountants Act, 1997 (as amended), Nepal Accounting Standards (NASs) are developed by the Accounting Standards Board (ASB), on the basis of relevant International Financial Reporting Standards (IFRSs).  In developing standards, the ASB takes into consideration the legal and regulatory environment and the preparedness of stakeholders in Nepal, with the objective of making the fewest possible modifications to IFRSs.

Under the Act, the Institute of Chartered Accountants of Nepal (ICAN) is required to monitor and regulate its members so as to ensure compliance with accounting standards developed or recommended by the Accounting Standards Board.

From its formation in 2003, the Accounting Standards Board developed a number of Nepal Accounting Standards which were based on equivalent IFRSs.  These standards did not include equivalents to all IFRSs, and were operative for financial statements covering periods beginning on or after 17 July 2008.  A number of other IFRS-equivalent standards were also available for voluntary adoption and these standards were operative for financial statements covering the periods beginning on or after 17 July 2007.

During 2013, the Accounting Standards Board finalised another set of accounting standards (Nepal Financial Reporting Standards, NFRS) that were based on all IFRSs on issue at that time (with the exception of IAS 29 Financial Reporting in Hyperinflationary Economies). NAS 1 Presentation of Financial Statements (equivalent to IAS 1) requires an entity to make an explicit and unreserved statement of compliance with NFRS (rather than IFRSs).  An equivalent to the IFRS for SMEs was also developed, the Nepal Financial Reporting Standard for Small- and Medium-sized Entities (NFRS for SMEs).

In September 2013, ICAN issued a Notification for Implementation of NFRS, which set the effective dates of transition to these standards, as follows (early adoption is permitted, and encouraged):

Category of entityFinancial year
  • Listed multinational manufacturing companies
  • Listed state owned enterprises (SOEs) with minimum paid up capital of Rs. 5 billion (except banks and financial institutions under the Nepali Banks and Financial Institutions Act, 2006)
2014-2015
  • Commercial banks, including state owned commercial banks
  • All other listed state owned enterprises (SOEs)
2015-2016
  • All other financial institutions not covered above
  • All other SOEs
  • Insurance companies
  • All other listed companies
  • All other corporate bodies/entities not defined as small or medium-sized entities (SMEs) or entities having borrowings of at least Rs. 500 million
2016-2017
  • Entities eligible to apply the NFRS for SMEs (as defined and classified by ASB)
2016-2017

Notwithstanding the above application dates, entities are required to apply NFRS 9 Financial Instruments (equivalent to IFRS 9) with effect from 16 July 2015 onwards.

Note: Links to documents other than IFRSs in this section are to official Nepali government websites or the ICAN website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.