NFRS (Banks-Gap Analysis)

This publication “IFRS in Banks of Nepal" is prepared by ICAN to highlight some of the key differences between NFRS and accounting practice in Nepal (as per NRB Directives, prevailing NAS and accounting most commonly found in practice) and also to encourage early implementation of NFRS by banks and financial institutions. If there are no or only less significant differences, such differences are ignored. The document also serves the purpose of
informing on the technical and operational challenges and the practicalities and implications of implementing NFRS in banking sector. This includes information on how converting to NFRS has implications far beyond the entity's financial reporting function and future changes in NFRS in line with IFRS that has impact on implementation
The publication is based on NFRS issued by Accounting Standard Board of Nepal 2014 version and Nepal Rastra Bank directives issued for 2014/15 issued with effect from Shrawan 1, 2071. With regard to IFRS authoritative pronouncements, provision as issued till 31st October 2014 are taken into account.

This document is not meant to be comprehensive to cover all areas that is affected by conversion to NFRS, but based on accounting practices followed by banks significant areas have been identified. The significant areas are identified based on:

  1. Significant changes in accounting policies that impact financial results of the bank such as impairment of intangible assets.
  2. Issues that impact bank's internal management information system and process to implement NFRS, such as generation of information for calculating impairment of loan and advances.
  3. Area that require significant changes in bank's system to evaluate and implement adjustment/disclosures required by NFRS, such as segment reporting.