Nepal Financial Reporting Standards

Financial statements are a structured representation of the financial positions and financial performance of an entity. The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.

To meet this objective, financial statements provide information about an entity's:

• assets;
• liabilities;
• equity;
• income and expenses, including gains and losses;
• contributions by and distributions to owners in their capacity as owners
• cash flows.

This information, along with other information in the notes, assists users of financial statements in predicting the entity's future cash flows and, in particular, their timing and certainty.

The following are the general features in NFRS:

• Fair presentation and compliance with NFRS:

Fair presentation requires the faithful representation of the effects of the transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework of NFRS.

• Going concern:

Financial statements are present on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so.

• Accrual basis of accounting:

An entity shall recognise items as assets, liabilities, equity, income and expenses when they satisfy the definition and recognition criteria for those elements in the Framework of NFRS.

• Materiality and aggregation:

Every material class of similar items has to be presented separately. Items that are of a dissimilar nature or function shall be presented separately unless they are immaterial.

• Offsetting

Offsetting is generally forbidden in NFRS.

• Frequency of reporting:

NFRS requires that at least annually a complete set of financial statements is presented.

• Comparative information:

NFRS requires entities to present comparative information in respect of the preceding period for all amounts reported in the current period's financial statements. In addition comparative information shall also be provided for narrative and descriptive information if it is relevant to understanding the current period's financial statements.

• Consistency of presentation:

NFRS requires that the presentation and classification of items in the financial statements is retained from one period to the next unless: (a) it is apparent, following a significant change in the nature of the entity's operations or a review of its financial statements, that another presentation or classification would be more appropriate having regard to the criteria for the selection and application of accounting policies. (b) an NFRS standard requires a change in presentation.

Nepal Financial Reporting Standards (NFRSs)

• 1 NFRS 1 : First Time Adoption of Nepal Financial Reporting Standards
• 2 NFRS 2: Share-based payment
• 3 NFRS 3: Business Combination
• 4 NFRS 4: Insurance Contracts
• 5 NFRS 5 : Non-Current Assets Held for Sale & Discontinued Operation
• 6 NFRS 6 : Exploration for and Evaluation of Mineral Resource
• 7 NFRS 7: Financial Instruments: Disclosures
• 8 NFRS 8 : Operation Segments
• 9 NFRS 9: Financial Instrument
• 10 NFRS 10 : Consolidated Financial Statements
• 11 NFRS 11: Joint Arrangements
• 12 NFRS 12 : Disclosure of Interest in Other Entities
• 13 NFRS 13 : Fair Value Measurement

Nepal Accounting Standards (NASs)

• 1 NAS 1: Presentation of Financial Statements
• 2 NAS 2: Inventories
• 3 NAS 7 :Statement of Cash Flows
• 4 NAS 8: Accounting Policies, Changes in Accounting Estimates and Error
• 5 NAS10 :Events after the Reporting Period
• 6 NAS 11 : Construction Contracts
• 7 NAS 12 : Income Taxes
• 8 NAS 16: Property, Plant & Equipment
• 9 NAS 17 : Leases
• 10 NAS 18 : Revenue
• 11 NAS 19 : Employee Benefits
• 12 NAS 20 : Accounting for Government Grants and Disclosure of Government Assistance
• 13 NAS 21 : The Effects of Changes in Foreign Exchange Rates
• 14 NAS 23 : Borrowing Cost
• 15 NAS 24 : Related Party Disclosures
• 16 NAS 26 : Accounting & Reporting by Retirement Benefit Plans
• 17 NAS 27 : Consolidated & Separate Financial Statements
• 18 NAS 28 : Investments in Associates
• 19 NAS 32 : Financial Instruments: Presentation
• 20 NAS 33: Earnings Per Share
• 21 NAS 34 : Interim Financial Reporting
• 22 NAS 36: Impairment of Assets
• 23 NAS 37 : Provisions, Contingent Liabilities & Contingent Assets
• 24 NAS 38 : Intangible Assets
• 25 NAS 39 : Financial Instruments: Recognition & Measurements
• 26 NAS 40 : Investment Property
• 27 NAS 41 : Agriculture

IFRICs & SICs

• 1 IFRIC 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities
• 2 IFRIC 2: Members' Shares in Co-operative Entities and Similar Instruments
• 3 IFRIC 4: Determining whether an Arrangement contains a Lease
• 4 IFRIC 5: Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
• 5 IFRIC 6: Liabilities arising from Participating in a Specific Market—Waste Electrical and Electronic Equipment
• 6 IFRIC 7: Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
• 7 IFRIC 10: Interim Financial Reporting and Impairment
• 8 IFRIC 12: Service Concession Arrangements
• 9 IFRIC 13: Customer Loyalty Programmes
• 10 IFRIC 14: IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
• 11 IFRIC 15: Agreements for the Construction of Real Estate
• 12 IFRIC 16: Hedges of a Net Investment in a Foreign Operation
• 13 IFRIC 17: Distributions of Non-cash Assets to Owners
• 14 IFRIC 18: Transfers of Assets from Customers
• 15 IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments
• 16 IFRIC 20: Stripping Costs in the Production Phase of a Surface Mine
• 17 SIC-7: Introduction of the Euro
• 18 SIC-10: Government Assistance—No Specific Relation to Operating Activities
• 19 SIC-15:Operating Leases—Incentives
• 20 SIC-25:Income Taxes—Changes in the Tax Status of an Entity or its Shareholders
• 21 SIC-27:Evaluating the Substance of Transactions Involving the Legal Form of a Lease
• 22 SIC-29:Service Concession Arrangements: Disclosures
• 23 SIC-31:Revenue—Barter Transactions Involving Advertising Services
• 24 SIC-32:Intangible Assets—Web Site Costs
• 25

The applicability depends upon the nature of entity. However NFRS-9, Financial Instrument shall be applicable with effect from 16 July 2015 onwards.

Type

Category A - from FY 2014-15

• Listed Multinational Manufacturing Companies
• Listed State Owned Enterprises (SOEs) with minimum paid up capital of Rs. 5 billions (except Banks and Financial Institutions under BAFIA Act, 2006)

Category B - from FY 2015-16

• Commercial Banks, including State Owned Commercial Banks;
• All other Listed State Owned Enterprises (SOEs)

Category C - from FY 2016-17

• All other Financial Institutions not covered under A & B above
• All other SOEs
• Insurance Companies
• All other Listed Companies
• All other Corporate Bodies/Entities not defined as SMEs or entities having borrowing with minimum of Rs. 500 million.

Category D - from FY 2016-17

• SMEs as defined and classified by ASB

• Institute of Chartered Accountants of Nepal
• Nepal Accounting Standard Board
• List of International Financial Reporting Standards
• Philosophy of Accounting
• International Public Sector Accounting Standards

• http://www.ican.org.np/nfrs.php
• http://standards.org.np/asb/index.php