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.
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; andcash 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.
OffsettingOffsetting 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 Standards2 NFRS 2: Share-based payment3 NFRS 3: Business Combination4 NFRS 4: Insurance Contracts5 NFRS 5 : Non-Current Assets Held for Sale & Discontinued Operation6 NFRS 6 : Exploration for and Evaluation of Mineral Resource7 NFRS 7: Financial Instruments: Disclosures8 NFRS 8 : Operation Segments9 NFRS 9: Financial Instrument10 NFRS 10 : Consolidated Financial Statements11 NFRS 11: Joint Arrangements12 NFRS 12 : Disclosure of Interest in Other Entities13 NFRS 13 : Fair Value Measurement
Nepal Accounting Standards (NASs)
1 NAS 1: Presentation of Financial Statements2 NAS 2: Inventories3 NAS 7 :Statement of Cash Flows4 NAS 8: Accounting Policies, Changes in Accounting Estimates and Error5 NAS10 :Events after the Reporting Period6 NAS 11 : Construction Contracts7 NAS 12 : Income Taxes8 NAS 16: Property, Plant & Equipment9 NAS 17 : Leases10 NAS 18 : Revenue11 NAS 19 : Employee Benefits12 NAS 20 : Accounting for Government Grants and Disclosure of Government Assistance13 NAS 21 : The Effects of Changes in Foreign Exchange Rates14 NAS 23 : Borrowing Cost15 NAS 24 : Related Party Disclosures16 NAS 26 : Accounting & Reporting by Retirement Benefit Plans17 NAS 27 : Consolidated & Separate Financial Statements18 NAS 28 : Investments in Associates19 NAS 32 : Financial Instruments: Presentation20 NAS 33: Earnings Per Share21 NAS 34 : Interim Financial Reporting22 NAS 36: Impairment of Assets23 NAS 37 : Provisions, Contingent Liabilities & Contingent Assets24 NAS 38 : Intangible Assets25 NAS 39 : Financial Instruments: Recognition & Measurements26 NAS 40 : Investment Property27 NAS 41 : AgricultureIFRICs & SICs
1 IFRIC 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities2 IFRIC 2: Members' Shares in Co-operative Entities and Similar Instruments3 IFRIC 4: Determining whether an Arrangement contains a Lease4 IFRIC 5: Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds5 IFRIC 6: Liabilities arising from Participating in a Specific Market—Waste Electrical and Electronic Equipment6 IFRIC 7: Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies7 IFRIC 10: Interim Financial Reporting and Impairment8 IFRIC 12: Service Concession Arrangements9 IFRIC 13: Customer Loyalty Programmes10 IFRIC 14: IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction11 IFRIC 15: Agreements for the Construction of Real Estate12 IFRIC 16: Hedges of a Net Investment in a Foreign Operation13 IFRIC 17: Distributions of Non-cash Assets to Owners14 IFRIC 18: Transfers of Assets from Customers15 IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments16 IFRIC 20: Stripping Costs in the Production Phase of a Surface Mine17 SIC-7: Introduction of the Euro18 SIC-10: Government Assistance—No Specific Relation to Operating Activities19 SIC-15:Operating Leases—Incentives20 SIC-25:Income Taxes—Changes in the Tax Status of an Entity or its Shareholders21 SIC-27:Evaluating the Substance of Transactions Involving the Legal Form of a Lease22 SIC-29:Service Concession Arrangements: Disclosures23 SIC-31:Revenue—Barter Transactions Involving Advertising Services24 SIC-32:Intangible Assets—Web Site CostsThe 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 CompaniesListed 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 aboveAll other SOEsInsurance CompaniesAll other Listed CompaniesAll 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
