Nepal Financial Reporting Standards

Accounting

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Nepal Financial Reporting Standards (NFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable within Nepal. The rules to be followed by accountants to maintain books of accounts which is comparable, understandable, reliable and relevant as per the users internal or external.

NFRS was issued by Nepal Accounting Standard Board in 2013. Earlier it has issued Nepal Accounting Standards. NFRS is prepared in line with on IFRS.

Objective of financial statements

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; and
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.

List of NFRS issued

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

Applicability

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

External links

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Nepal Financial Reporting Standards

Objective of financial statements

List of NFRS issued

Applicability

See also

External links