Nepal Financial Reporting Standards (NFRS)
Nepal Financial Reporting Standards (NFRS) are set of financial reporting standards developed by
the Accounting Standards Board (ASB) with belief that the common global language for business
affairs so that company accountants are understandable and comparable within Nepal.
Who have Public Accountability?
1) Whose debt or equity instruments are traded in public market or is in process of issuing
such instruments (except listed Micro Finance not having economic significance)
2) It holds assets in a fiduciary capacity for broad group of outsiders as one of its primary
businesses:
a. banks, credit unions, insurance companies, security dealers and mutual funds,
investment banks (except Micro Finance and Cooperatives not having economic
significance)
b. Pension and retirement fund
3) Government Business Enterprises (GBEs), Public entities established under special acts
not preparing financial statements under NPSAS
4) Entities having economic significance
What is Economic Significant?
1) The entity called entity having economic significant if any of the
following, conditions are satisfied
2) Borrowings from B&FIs or public funds or from entities holding an
assets in fiduciary capacity of NPR 50 Crore (500 Million) or more;
3) Total of Financial Position (Balance Sheet) without offsetting
current assets and current liabilities) of NPR 1 Arab (1000 Million)
or more;
4) Employing more than 300 employees including worker during the
year on an average
5) Annual Turnover of NPR 1 Arab (1000 Million) or more
6) Holding an assets in fiduciary capacity in excess of NPR 50 Crore
(500 million) including security brokers handling Demat account,
micro finance and co-operatives
Note: An entity which attains at least 1 of these limits in 2 consecutive
years shall be deemed to be an entity having economic significance
to qualify as an entity with public accountability and once qualified,
must fall below all of these limits for 2 consecutive years to cease to
qualify.
What is Small and Medium-sized Entities (SMEs)?
Small and Medium-sized Entities (SMEs) are the entities that;
1) Do not have public accountability; and
2) Publish general purpose financial statements for external users
Note: General purpose financial statements are those directed to
general financial information of the wide range of users who are not
in position to demand reports tailored to meet their particular
information needs.
Therefore, entity comply with the above definition of SMEs shall
prepare financial statements as per NFRS for SMEs issued by The
Institute of Chartered Accountant of Nepal.