The Accounting Standards Board (ASB) of Nepal expects to adopt international financial reporting standards (IFRS) for listed multi-national companies by 15 July 2014, according to a report by the Asian-Oceanian Standard-Setters Group (AOSSG).
The ASB was established in 2003 and to this date has issued 19 Nepal Accounting Standards (NAS) , which are largely based on the corresponding IFRS. These standards have been operative since 15 July 2008.
However in recent years, the ASB has worked towards adopting IFRS, which will be named the Nepal Financial Reporting Standards (NFRS), and has released a timeframe for adoption.
For financial reporting periods beginning 15 July 2014 listed multi-national companies will be required to report in compliance with NFRS. Financial institution will be required to comply with NFRS by financial reporting periods beginning 15 July 2015 and state-owned enterprises and other listed entities will follow suite in the following financial reporting periods, starting 15 July 2016.
In its efforts to build its standard setting capacity and adopt IFRS, the ASB has received the help of the Asian-Oceanian Standard-Setters Group (AOSSG). The AOSSG is a grouping of the accounting standard-setters in the Asian-Oceanian region which aims to foster the adoption of IFRS in the region.
In 2012, the AOSSG members decided to set up a IFRS Centre of Excellence (IFRS CoE) in Nepal to help the ASB in its capacity building. One of the first initiatives of the IFRS CoE in Nepal was to publish a review of Nepal’s standard-setting processes.
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AOSSG’s review, Report on Standard-Setting Capacity in Nepal – Building Regional Capacity Initiative, was published earlier this week and suggested that while significant progress to adopt International Financial Reporting Standards (IFRS) has been made, the country’s standards setter lacks both financial and human resources.
"We note that the ASB has made significant progress in rolling out IFRS in Nepal despite being limited in both financial and human resources," the report read. "The strides made both in the setting of standards and in the development of the accounting profession in Nepal over the past 20 years have been very commendable."
Through its review the AOSSG made a series of recommendation to the ASB. Most notably it suggested the development of a business plan including key strategies for strengthening the professional competence and effectiveness of the ASB.
The business plan should include a strategic plan that identifies the IFRS technical projects and adoption plan, the AOSSG’s recommendation continued. "A strategic plan for improved funding also needs to be developed and executed with the Nepal government and donor agencies."
Nepal faces enormous challenges and has shown a genuine preparedness to respond to them, the AOSSG concluded. "We believe that the standard-setting and related financial reporting capacity would be greatly improved with the provision of additional financial resources and technical support."