June 2015

Vol. 17 No. 4

P A

ACCOUNTANT

(Quarterly Journal of The Institute of Chartered Accountants of Nepal)

Editorial Committee
CA. Narendra Bhattarai
CA. Prakash Lamsal
CA. Nirmal Aryal
CA. Chhetra Gopal Pradhan
CA. Ramesh Kumar Dhital
RA. Dev Bahadur Bohara
RA. Shankar Gyawali
Mr. Binod Neupane

Chairman
Vice -Chairman
Member
Member
Member
Member
Member
Secretary

Mr. Binaya Paudel

Editorial Support

The Institute of Chartered Accountants of Nepal

Satdobato, Lalitpur, P O Box 5289, Kathmandu, Nepal
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Contents
Editorial

President's Message

EARTHQUAKE SPECIAL
Auditing Disaster Related Fund

The Great Gorkha Earthquake: Accounting Considerations

- CA. Nanda Kishor Sharma
13
Fiscal and Monetary Response: Earthquake Nepal-25/4
- CA. Anal Raj Bhattarai
19
Challenges for Proper Functioning of Insurance in the
Catastrophic Event
- CA. Surendra Bhusan Shrestha

Lessons Learned from April 25 Earthquake for Disaster

Preparedness
- CA. Mukund Pokharel (CISA)

24

Humanitarian Aid: IFAF to Ensure Better Accountability

and Transparency
- CA. Chandra Kanta Bhandari
32
Chartered Accountants in Resilient Nepal
- CA. Sujeev Shakya

36

Planned Investment in the 13th Plan and Recommended

Framework for the Coming Budget
- Mr. Tula Raj Basyal
38
Tax
An Analysis of VAT Threshold Increase

- CA. Bishnu Prasad Bhandari (LLB, DipIFRS, CCIT)

Recommendation

Rs. 300 (if received by self)

News
Notices

Opinions expressed by the contributors in this journal are their own and do not
necessarily represent the views of the Institute. Member Bodies of SAFA may quote
or reprint any part of this journal with due acknowledgements. For others, solicitation
is expected.

22

Regulated CSR or Increased Tax Analyzing Better Option

for Rebuilding the Nation
- CA. Santosh Ghimire (LLB, DipIFR)
29

Rs. 600

(including courier charges for Organizations)

Rs. 400 (including courier charges for Member)

- Mr. Ramu Prasad Dotel

Information
Contributors
INCO-Panel Industries Pvt. Ltd.
G4S Security Services Nepal Pvt. Ltd.
Vianet Internet
Standard Chartered

43
46
51-60
18,49-50,63-64
65,66

We witnessed one of the most catastrophic disasters in recent times in the form of
earthquake on 25th April 2015. Preliminary assessment indicates the loss of over
8,000 lives; impact upon 8 million people and loss of property worth billions of
dollars. This tragedy of earthquake cannot be measured only in numbers. Every area
in the economy has been adversely affected. We are deeply shocked by this devastating
incident.
This wide spread natural disaster has not only affected the earthquake hit districts
but also impacted economic growth parameter to the country. The preliminary analysis
of Post Disaster Need Assessment report shows a loss of Rs.666 Billion that the
country suffered due to earthquake. Considering the magnitude of tremor it appears
that the repercussion of damage caused by earthquake might take some years to
recover.Many of the public and private organizations directly and indirectly impacted
by this event and likely to create problems in financial reporting of these entities.
As the part of the economy, accounting industry has also been affected by the
earthquake and necessitated to remain cautious and demonstrate the professional
ability in providing accounting services. In this situation, it is challenging and difficult
to the accounting professional with regards to accounting implication of natural
disaster particularly in the areas such as valuating the assets damaged, accounting
for insurance recoveries, loan covenants, compensation to third parties, financial
statement disclosure requirement etc. In the view of the above it is important to
consider the relevant Accounting Standards as well as Auditing Standards while
providing accounting services and expressing audit opinion on Financial Statement
prepared under the earthquake affected period. Similarly the recent earthquake
disaster has resulted in massive loss of life and public infrastructure and property.
After the tremor government has received relief aid in cash and kind from international
agencies, friendly countries, non-government organizations, individuals for the
earthquake victims need to be properly utilized. The government of Nepal hosted
international conference in June 25 2015 in Kathmandu for securing support from
friendly countries and international donor agencies for post disaster recovery and
reconstruction in the coming years. Almost all the countries and agencies attending
the conference have pledged to financial assistance for Nepal's rebuilding efforts.
In this context, the funding and spending both are challenging to the government
which require efficient, effective and transparent utilization of funds. In this situation
it is also challenging to the public sector auditors in auditing the disaster related aid.
In the backdrop of above, we have attempted to publish special issue of Journal by
including various articles of the accounting and audit experts with regards to
implication of earthquake on accounting and auditing so as to keep the readers and
professionals abreast of this exceptional scenario created by the devastating earthquake.
We hope that the articles published shall be of immense value to the membership
and entire accounting profession serving in private or public sector in discharging
their professional responsibility. In this situation we need to realize it as testing time
for entire accounting profession and let us join hands to show our worth.

ACCOUNTING

Dear Professional Colleagues,

This is my last formal message from this high office of President
of Institute of Chartered Accountants of Nepal (ICAN). All of us
have mission and I had also started my journey as President ICAN
with a mission. When I took over the baton of the ICAN, I had a
mission of Striving for Excellence which was coined at the front
page of the Strategic Plan 2014/15 - 2016/17. The Strategic Plan
2014/15 - 2016/17, which was prepared under my leadership, was
unveiled by Honorable Finance Minister on my first working day
as the President of ICAN. I am proud to say that we have
accomplished most of the activitiessuccessfully which were planned
to be achieved during 2014- 15 in the Strategic Plan.

President's
Message

Promote Ethics and Integrity

As a result of the global financial crisis 2008, there is a more
critical attitude toward the accounting profession all over the
world. There is a risk that the solid goodwill that the accounting
profession has built over the century could gradually be worn
down. Therefore the accounting bodies all over the world are
purposeful to reckon it more clearly and strongly to make it known
to the world that the profession has a very strong Code of Ethics
set by an independent Ethics Board of IFAC, and that professional
accountants are held accountable to this very strict Code.
Furthermore, and most importantly, accounting bodies emphasized
to make known that the hallmark of the profession is its commitment
to act in the public interest.
Accounting professionals act in the public interest serving the best
interests of our nation, our profession, our members, our students
and other allied stakeholders. For a sustained economic prosperity
and development of the nation, ethics must be suitably present in
all our endeavors and the society must bear the responsibility to
promote ethics and values among its people. This is more crucial
for Nepal in the context of low level of accountability, transparency
and governanceresulting high fiduciary risk in all the sectorsprivate, corporate and government. As the accounting professionals
act in the public interest, this is the obligation of the accounting
professionals to promote the slogan, work with integrity and
succeed with integrity, as propounded by former Indian President
Dr. A. P. J. Abdul Kalam. This is the right place to acknowledge
on behalf of ICAN that ethics and integrity have been our
fundamental guiding forces since inception. Accordingly ICAN
has been pronouncing its code of ethics for its member from time
to time. To date the Code of Ethics pronounced by ICAN based
on IFAC code of ethics 2010 has been in effect. ICAN has
pronounced the new code of ethics developed based on the IFAC
Code of Ethics 2014, which shall be effective from January 1,

The Nepal Chartered Accountant

June 2013

35

2016. There is the program to disseminate salient features

of the Newly Pronounced Code of Ethics in the conference
to be held on July 22, 2015 being organized on the occasion
of the handing over ceremony of the new President of ICAN.

Partner in Nation Building

Initiatives on PFM Reform: Public financial management
has been one of the weak links in national development
process resulting weak implementation of the project and
failing to attain desired output and outcome. In order to have
the open discussion on the issue ICAN took an initiative to
organize Nepal Public Sector Roundtable on 28 March 2015
and Nepal Public Sector Financial Management Conference
on March 28- 29 2015. Both the programs were supported
by World Bank and CAPA.
Nepal Public Sector Roundtable: The Roundtable was
chaired by ICAN President and the members of PSFMC of
CAPA and representatives from the World Bank, ADB, and
EU joined with the government officials and other dignitaries
from Nepal. Financial Comptroller General (Success Story
of TSA and NEPSAS Implementation), Joint Secretary,
Minister of Finance (Macro Economic Management),
Assistant Auditor General, OAGN (Strengthening Quality
and Impact of Audit), Secretary, Public Accounts Committee
(PAC's Role to Enhance the Impact of Audit) Under Secretary,
PEFA Secretariat (PFM Initiatives - Result of PEFA
Assessment), and Past President, Nepal Auditing Standards
Board (Role of accounting professionals in PFM reform
initiatives) had made presentation to initiate discussion.
CAPA member organizations and invited guests had shared
experiences from Australia, India, Korea, Malaysia, New
Zealand, Sri Lanka, Bhutan, Japan and United Kingdom.
CAPA Chief Executive also had shared the PSFMC's
publication - 'The Eight Key Elements of PFM Success'.
Public Sector Financial Management Conference: The
Conference was inaugurated and addressed by Hon. Finance
Minister Dr. Ram Saran Mahat. Hon. Auditor General Mr.
Bhanu Prasad Acharya and CAPA President also attended
and addressed the conference. Former Finance Secretary of
GON Prof. RameshworKhanal delivered keynote speech.
Approximately 150 persons attended the Conference.
The Conference was divided into 4 Technical Sessions. The
first session was dedicated for public sector officials of Nepal
to share the latest that include:
l

World Bank ROSC Accounting and Auditing Review

PEFA Assessment 2014

l SAI Performance Measurement Framework Review
The PEFA Assessment noted good improvement since the
last assessment in 2008, and this has been accomplished
during a period of political uncertainty with no public accounts
committee in place for some years. A move to a Treasury
Single Account and progress towards IPSAS cash based
accounting were important contributors to this result.
l

Peer Review Report of OAGN prepared by SAI, India based

on the SAI Performance Measurement Framework was
presented. Usually SAI Performance Measurement
Framework Review Reports are not always made public, and
it was interesting to note comments from the Auditor General
that he decided to make the report public since his office is
promoting transparency and therefore important he practices
the same.
Resource persons representing CAPA from New Zealand,
Australia, UK (ICAEW and ACCA) delivered presentations
on a number of contemporary topics relevant to the Nepal
public sector, either currently or for future consideration.
The topics included latest accountancy profession
developments, accounting standards (IPSAS), PFM reform
initiatives, sustainable public finances, financial and
performance reporting, audit committees and internal audit,
government accounts, and professionalizing the public sector.
The Round Table and Conference concluded with mutual
agreement that there is capacity gap in government system
to take forward the PFM Reform agenda and therefore
dialogue between ICAN and the GON needs to continue to
ensure the accountancy profession is contributing towards
PFM reform and high quality public sector accounting,
auditing, and financial reporting.
Suggestions to High Level Tax Reform Commission:
ICAN provided the written suggestions to improve taxation
system - income tax and VAT to the Commission and also
participated in the discussion program under the guidance
of Past-President CA. T. R. Upadhyaya. Comment on the
Draft Report was provided by President.
Contribution to Prime Minister Disaster Relief Fund:
Nepal witnessed a very destructive and devastating earth
quake on April 25,26 and May 12, 2015 destroying huge
number of life and properties including many monumental
places of historical and archaeological importance like
Kathmandu Durbar Square, Patan Durbar Square, Bhaktapur
Durbar Square, Shwoyambhunath areas and many others. It

rehabilitation programs activities being carried out in

the district deputing an accounting firm for each district
for this purpose.

was a catastrophic disaster and very heart breaking. From

April 25, 2015 we have been experiencing number of shocks
to date.
Many of the helping hands from different countries and
international communities are bringing worldwide goodwill
and financial and physical support for rescue, relief,
reconstruction, rehabilitation of the needy. ICAN being a
professional body of highly skilled individuals with regional
and international linkage, it becomes our responsibility to
show our gesture and goodwill and extend possible financial
support to the needy. Therefore we have opened a Bank
Account as 'ICAN Earthquake Relief Fund 2015' in Nepal
Bangladesh Bank (Account Number 005189951 C, SWIFT:
NPBBNPKA) to deposit the contribution made by the
accounting fraternity. We received generous contribution
from our members and from CAPA, CPA Australia, Institute
of Chartered Accounts of Bangladesh, Institute of Cost and
Management Accountants of Bangladesh. We have learnt
that other accounting bodies including Institute of Chartered
Accountants of India are also making necessary arrangements
to support the cause of humanity. The total amount of Rs.
2,704,000 deposited in 'ICAN Earthquake Relief Fund 2015'
up to June 30, 2015 has been handed over to Rt. Hon. Prime
Minister Mr. Sushil Koirala as a contribution to 'Prime
Minister Disaster Relief Fund'. The name of the contributors
is mentioned in this Journal.
Suggestion for Reconstruction and Rehabilitation: ICAN
has provided its suggestion for effective implementation of
the reconstruction and rehabilitation programs being
undertaken by GON. The main features of the suggestions
are:
l

Establish a special purpose vehicle for this purpose with

terminal duration to implement the reconstruction and
rehabilitation programs efficiently and effectively with
desired outcomes.
Strengthen the capacity, capability, structure and manning
of VDCs which are the actual service delivery front for
the program. The VDC with reconstruction and
rehabilitation programs should be headed at least by
Section Officer level staff with enough supporting staff
like accountant, sub-engineer, health personnel etc.

Make an arrangement to provide support for individual

house construction based on output - output based aid.

Make an arrangement of financial and operational

verification and reporting of all the reconstruction and

ICAN is willing to support government to design internal

control and monitoring mechanism required to reduce
fiduciary risk in reconstruction and rehabilitation
programs implementation.

Initiatives for Professional Development

Information System Audit (ISA) Course: The Institute
organized ISA course with the technical collaboration of the
Institute of Chartered Accountants of India (ICAI). The aim
of the course was to enhance the professional skills of
Chartered Accountants in the field of information system
audit. Thirty Chartered Accountants participated in the course.
Minimum Remuneration and Auditing Fee for the
Members in Practice: In order to render the service to the
expectation of stakeholders within the framework of the
fundamental principles and Code, professional accountant
in public practice must be paid appropriate remuneration so
that there will be no difficulty to perform the engagement in
accordance with applicable technical and professional
standards. The Institute has fixed the minimum remuneration
for the members in practice in consideration of the quality
and type of service to be rendered and the cost to be involved
for that purpose. In fixing the minimum remuneration the
ICAN Council considered to increase the remuneration so
that (a) accounting profession may be able to attracts, retains,
develop and motivates young accounting professionals in
practice (b) the remuneration is consistent with the
remuneration of other professionals and members in business
(c) cost of providing professional accounting services (d)
integrity of the remuneration- respectful and to be believed
by the society at large.
The minimum remuneration shall be applicable for all
appointments on or after the first day of the fiscal year 201516.
Pronouncement of Nepal Auditing Standard 2015: Institute
has pronounced the new Nepal Auditing Standard 2015 which
was developed by Nepal Auditing Standard Board in
compliance of the Clarity Project of IFAC. The new Auditing
Standard shall be effective from the first day of the next F/Y
2016-17. There is the program to disseminate salient features
of the Newly Pronounced Auditing Standards in the conference
to be held on July 22, 2015 organized on the occasion of the
handing over ceremony on the new President of ICAN.

Initiative to Constitute Quality Assurance Board: In order

to strengthen the regulatory role ICAN in true sense Council
has approved to establish Quality Assurance Board. It is
expected that we will get government approval shortly.
Establishment of Benevolent Fund: ICAN Council has
decided to establish Benevolent Fund for the benefit of its
members. ICAN is in the process of framing the Guidelines
for the operation of the Fund. All the members shall be
notified to contribute to this fund once the guidelines is
approved by Council.

Initiatives for Academic Development

Initiative to Constitute Board of Studies: In order to
strengthen the education system of ICAN it was felt necessary
to have a strong and permanent mechanism to drive the
education system to cope the demand and need of the market
nationally and internationally. Therefore the Council has
approved to establish Board of Studies.It is expected that we
will get government approval shortly.
Revision of Syllabus: In order to make the syllabus relevant
and to cope the demand of the time, the syllabus of all the
levels have been revised. It was also decided that there is
need of restructuring of the syllabus and restructuring shall
be completed by 2016. The restructuring shall be done
inconsideration of the twinning arrangement with ICAEW.
Contribution to Scholarship Fund: In order to develop the
profession with the premise of inclusion and make it within
the reach of good but needy students, the Institute has been
providing scholarship for years. ICAN has been contributing
its saving in the Scholarship Fund. From the F/Y 2014/15
some of the members have also started to contribute to the
Scholarship Fund and I encourage our esteemed members
to contribute to this fund. The list of contribution is mentioned
in this Journal.
Contribution to Medal Fund: In order to encourage the
successful students, ICAN has established different Medal
Funds contributed by different members.The list of
contribution is mentioned in this Journal. I encourage our
esteemed members to contribute to this fund

Promotion of International Relation

Participation WCOA 2014: I had a rare opportunity to
attend World Congress of Accountants 2014 in a gathering
of more than 5,000 accounting professionals from every
corner of the planet at Rome. In 1494 - just two years after

Columbus discovered America - the first book on doubleentry accounting was published. The author was an Italian
friar, Luca Pacioli. It was a continuity of history that five
centuries later, more than 5000 accountants from around the
world gathered in the Italian City of Rome to celebrate the
World Congress of Accountants 2014. World Congress of
Accountants 2014 presented a wonderful opportunity for
accounting professionals to confirm that we are a global
profession and that we serve the public interest globally.
SAFA Board and Committee Meetings: I am pleased to
inform you that ICAN hosted SAFA Board and Committee
Meetings twice during the year - in the month of July 2014
and March 2015.
CAPA PSFM Committee Meeting: ICAN hosted CAPA
Public Sector Financial Management Committee Meeting in
Kathmandu and also hosted World Bank-CAPA Joint Meeting
for FRED 2 was held in Korea in March 2015.
Strengthened Working Relationship with the World Bank:
on March 28-29, 2015 ICAN organized Nepal Public Sector
Roundtable and Public Sector Financial Management
Conference jointly with CAPA and WB. The CAPA provided
technical support and WB provided both technical and
financial support to organize the event in Kathmandu
successfully.
ROSC Review: Report on Observance of Standards and
Codes - Accounting and Auditing (ROSC AA) Review has
been completed and the draft report was presented and
discussed in the Public Sector Financial Management
Conference held on March 2015 in Kathmandu. The Report
is at final stage and the Action Plan and Timetable for ROSC
AA Review implementation has to be worked out along with
the World Bank and the same has to be implemented by
ICAN.
MOU for Piloting Audit Quality Assurance Systems
Roadmap: In order to expedite the Quality Assurance Process,
ICAN has signed a MOU with ADB in coordination with
CAPA. ADB is in the process of Consultant selection and
this will be implemented soon.
MOU with ICAEW: ICAN Council has approved the MOU
to be signed with Institute of Chartered Accountants of
England and Wales for Mutual Recognition. This MOU will
be signed at mutually agreed time and venue shortly. This
initiative will definitely help us to enhance our standing in
the international arena as ICAEW is the premier and second
oldest Chartered Accountants Institute in the world (The first

Institute is Institute of Chartered Accountants of Scotland

established in 1854 and ICAEW was established in 1880).
Twinning Arrangement with ICAEW: During WCOA
2014 in Rome we met the President and CEO of ICAEW
and talked about the both MRA and Twinning Arrangement.
As twinning arrangement takes a little longer time they
suggested to go for MRA immediately and to plan for twinning
arrangement. Under twinning arrangement ICAN's total
education and examination system including curriculum,
study materials andtraining shall be made compatible with
that of ICAEW except for taxation and corporate law. The
students who will pass CA examination from ICAN shall
get exemption in ICAEW except in few subjects. The students
who have got training in the firms rated by ICAEW shall get
full exemption on training. I am confident that the twinning
shall be instrumental to improve quality of both education
and examination as well as that of the quality, capacity and
competency of members and accounting firms. For this
purpose the study team from ICAEW was supposed to arrive
on May 2015 but it has been delayed to September 2015
because of earthquake. As per our discussion with ICAEW,
it is expected that DFID will be funding this initiative.
Understanding with ACCA for Diploma in IFRS: ICAN
has developed as understanding with ACCA that ACCA shall
provide all study materials and impart training on IFRS
physically in Kathmandu to the nominated members of ICAN
to help NFRS implementation initiative of ICAN and also
the ICAN members shall be given 50% rebate on the
examination fee of Diploma in IFRS. First batch of the
training has been completed but the examination could not
be held in June 2015 in Kathmandu because of earthquake.
The next examination shall be held in December, 2015.

Elections 2015
I am glad to inform you that the election to the Seventh
Council was held successfully in June 2015 and the election
of the President and Vice-President was concluded on July
15, 2015. I heartily congratulate my colleagues CA.
PrakashLamsal and CA. Mahesh Khanal for being elected
as the President and Vice-President respectively for the first
term of Seventh Council of ICAN. I would also like to
congratulate and welcome the newly elected council members
of the Seventh Council of ICAN. I am sure that the 7th
Council will take our profession to a better height.

Acknowledgement
I am leaving the office of the President of ICANwith a happy
and satisfied note. I never took the position of the President
for granted, since I know there was somebody in this position
before me, and there will be someone after me as well.I must
thank my colleague CA. PrakashLamsal, Vice-President of
the Institute, who helped me in dealing with the matters of
critical concerns. I offer him my best compliments for his
journey as the President of the Institute for the next term. I
am sure that he will take the profession further higher under
his leadership.
I would like to put on record on behalf of my profession my
sincere appreciations for Hon. Finance Minister Dr. Ram
Saran Mahat, Hon. Auditor General Mr. Bhanu Prasad
Acharys, Finance Secretary Mr. Suman Prasad Sharma,
Secretary (former FGC) Shankar Prasad Adhikari, Revenue
Secretary Mr. Naba Raj Bhandari, Joint Secretary
BaikunthaAryal, Joint Secretary Mr. MadhusudanPokhrel,
Director General Mr. Chudamani Sharma, AAG Mr. Babu
Ram Gautam, Under Secretary Babu Ram Subedi as well as
other office bearers of the Ministry of Finance, Office of the
Auditor General of Nepal and FCGO for receiving their
complete support and encouragement in all our initiatives
and endeavors.
I acknowledge the support of the Council Members of the
6th Council for their willing help, cooperation and contribution
in the agenda of accountancy profession. I am sure, being in
profession and having similar goals and objectives for our
dear profession, we will have to march with willingness to
work in coordination and association.
Last but not the least I also acknowledge the contribution of
the employees of the Institute led by Executive Director CA.
BinayPrakashShrestha for their sincerity and efforts in the
transformation of our profession. This is my strong belief
that the secretariat is the permanent structure of the Institute
and profession can prosper only when they do the best.

CA. Narendra Bhattarai

President

EARTHQUAKE

Auditing Disaster Related Fund

1. Background

As a part of the worldwide

movement for transparency
and accountability, the SAI
should focus on the audit of
disaster related fund.
International Organisation
of Supreme Audit Institution
(INTOSAI) has issued
s t a n d a rd o f I S S A I 5 5 0 0
series to conduct audit of
such fund.

Mr. Ramu Prasad Dotel

Mr. Dotel is Assistant Auditor General of Nepal
Email: ramu_dotel@hotmail.com

An event resulting great loss and

misfortune is call disaster. UN
defines disaster as "A serious
disruption of the functioning of a
community or a society causing
widespread human, material,
economic, or environmental losses
which exceed the ability of the
affected community or society to
cope using its own resources." It
is uncertain and may strike any
time in any part of the world. It
may be natural e.g. earthquakes,
volcanic eruption, tsunami,
floods, landslide, tornado and
man-made e.g terrorism, war,
nuclear accidents, plane crash etc.
Whatever might be the type of
disaster, it creates devastating
human and economic impact to
t h e c o u n t r y. A n n u a l a v e r a g e
number of deaths and economic
damage due to disasters are
reported high in the world since
2000 AD. In a disaster situation,
emergency response is required
to the individuals and
communities. Humanitarian
assistance is to be flown to the
affected area. The emphasis is
given to save the human first,
alleviate hardship, maintain law
and order, establish normalcy and
r e g a i n h u m a n d i g n i t y.

Government effort may not be

sufficient to recover the situation.
Thus, individuals, communities,
national
international
governments and other agencies
should be mobilized quickly to
respond the emergency situation
created by disaster.
While responding the disaster,
human, financial and physical
resources are mobilized from
different individuals, agencies,
organizations and countries. Such
resources are called disaster aids
which are provided to help the
victims. Disaster aids can be
provided in cash or kind or
mixture of both. The source of
assistance may be national or
international, public or private.
Financial assistance received
from different governments and
institutions is deposited in special
fund, in case of Nepal it is called
Prime-Minster Disaster Relief
Fund. Assistance in kind may be
in the form of material and
services such as food, tent,
deployment of staff or military
etc. Government is liable to
channelize and manage disaster
aids. However, many individuals
and organizations are involved in
providing coordinating and
delivering such aids.

The Nepal Chartered Accountant

June 2015

EARTHQUAKE

Huge amount of fund, material and services are

mobilized considering the magnitude and
vulnerability of the impact of disaster. Disaster
management and managing disaster related aids is
the primary responsibility of the Government. In
Nepalese context Disaster Relief Committees are
formed and Emergency Operation Centers are
established in central and district level to manage
and coordinate required activities at different stage
of disaster management. At the time of disaster,
focus is given to respond the emergency situation.

Disaster management has two phases pre-disaster and postdisaster. Under pre-disaster phase, mitigation and prevention
and preparedness activities are executed which include
risk assessment and hazard mapping, development of
disaster management strategy and action plan, construction
of flood barrier, strengthening weak building and structure,
enforcement of legal provision and construction code,
developing and testing warning system, land use planning,
evacuation plans, developing open place, maintaining basis
supplies and material related to emergency shelter. Such
activities are directed to reduce the loss of life and property.

Supreme Audit Institutions (SAIs) have a vital

contribution to make government accountable to the
parliament and citizen in managing the disaster
related aids. The issue of accountability is a
fundamental concept which is equally important at
the time of emergency state for the operation of
democratic system. In the situation of disaster, as a
part of the worldwide movement for transparency
and accountability, the SAI should focus on the audit
of disaster related fund. International Organisation
of Supreme Audit Institution (INTOSAI) has issued
standard of ISSAI 5500 series to conduct audit of
such fund.

Immediate response is required at the time of disaster. The

post-disaster phase includes different activities of recovery,
relief, rehabilitation and reconstruction. Under recovery
and relief, victims are searched and rescued, food, drinking
water and basic facilities supplied, emergency medical
care provided. Likewise, taking care of victims, prevention
of outbreaks, building temporary shelter, rebuilding basic
infrastructure, trauma care facilities are the activities for
the rehabilitation. However, reconstruction activities are
targeted for the restoration of living condition. Major
activities include construction of permanent houses, schools,
clinics, reviving economic sector, restoration of public
infrastructure road and sanitation etc.

2. Disaster Management Cycle

3. Type of Disaster Related Audit

Each country defines disaster management policies to deal

with vulnerable condition. Such policies almost cover the
activities identified in above mention figure of disaster
management cycle.

Adequate fund is required to run the activities of different

stages. SAIs can carry out financial, performance and
compliance audits of disaster related fund. Financial audit
focuses on true and fairness of financial statements and
accounts, compliance audit concerned with fulfilling the
requirement of policy, procedures and legislation,
performance audit assesses the economy, efficiency and
effectiveness aspect of fund utilized or programmes and
activities executed. International Standards for Supreme
Audit Institution (ISSAIs) 1000-2999, 3000-3100, and
4000-4200 are used for financial, performance and
compliance audit respectively.
Each phase of disaster management cycle has specific
activities. The audit should focus on those activities.
However, the significant activities which are applicable
across different phase of disaster management cycle include:
emergency rescue and relief, damage and needs assessment,
selection of appropriate aids, agreement with donor and

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June 2015

EARTHQUAKE

disbursement of aids, procurement of necessary goods and

services, storage of goods and materials procured and
received in kind, distribution of relief to the victims,
construction temporary shelter, repaired or rebuilt of
damaged infrastructure, construction of permanent building,
report on use of financial and kind contribution etc.

Visiting warehouse location to check inventory and

4. Methodology for Disaster Audit

While conducting the disaster audit, SAI can adopt similar

audit methodology based on financial, compliance and
performance audit process. In planning stage, auditor
should obtain understanding about the disaster, its affected
area, outcomes, organizational roles and responsibility,
rule regulation and special directives, report of the civil
society and media, etc. This helps auditor to identify risks
factors. Moreover, auditor needs to gather sufficient
information regarding the controls to prevent and detect
risk associated with pre and post disaster activities. Controls
are evaluated to know whether the risks identified are
addressed by the control or not. Auditors need to focus
their attention in high risk areas having less control. After
identifying high risk areas, auditor should develop audit
objectives and design audit procedures accordingly. At this
point, nature, timing and extent of audit procedures are
also need to be determined. The auditor should obtain
sufficient and appropriate evidence to support the
conclusions of audit using test of control and substantive
procedures. Some important audit activities required to be
performed by the auditor as a part of audit procedures are:
Review the roles and responsibility of implementing

agencies involved in disaster management cycle in the

view of overlapping and internal control over the
activities performed by individuals,
Assessing the timeliness and adequacy of emergency
response carried out by the Government,
Performing analytical procedures to the total relief
distribution with the numbers of different categories of
victims,
Examining receipt to know whether intended recipient
actually received the aid as per directives,
Verifying the goods distributed from centre and received
by distribution location,
Checking the need assessment report with the
demographic data of the population census,

stocks,
Reviewing contract agreement of goods, supplies,
rehabilitation and reconstruction services,
Examine or review the records regarding the quality of
goods and services supplied to the victims,
Conducting interviews with beneficiaries using surveys
informing them of their entitlements and asking whether
they received or not,
Using external sources or an independent expert to
compare prices and costs of goods and services reported,
Taking the contract specification of emergency shelter
and permanent infrastructure and checking the quantity
and quality of the accommodation provided or constructed,
Examining large and unusual expenses, extraordinary
entries, etc.

5. Risks or Areas for Consideration for Audit

In planning and conducting disaster audit, SAIs should
conduct risk assessment. While conducting risk assessment
process, auditor needs to identify risk factors or red flag
areas in different activities of disaster management cycle.
Some important risk factors which auditor needs to consider
while conducting disaster audit are:
Delay- When disaster occurs, first priority should be

given to save lives and meet victim's needs. Delay in

the collection and distribution of relief is the risk factor
which needs to be focused by auditor.

Unintended recipient- Unintended recipients are those

who are not actually victims and not entitled to receive

aids. Need assessment is to be carried out to registered
victims and their requirements. Sometime, people may
register fake data regarding the affected population,
death, injury, damage. Report from people exaggerating
their needs or claiming more dependents is the major
problem to identify the actual information. Some people
may create documents as required by directives aftermath
of disaster. Inadequate demographic data and lack of
procedures may result incorrect needs assessment which
ultimately flow away aid from needy individuals.

Undistributed funds/material- Inappropriate needs

assessment and lack of suitable procedures may result

financial and in-kind aid either undistributed or

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June 2015

10

EARTHQUAKE

distributed but that are unnecessary or unsuitable as

per culture or circumstances of the victims.
Unrecorded aid- Financial and in-kind aids received

from national international agencies and individuals

but not recorded in books of account is another risk
factor. This may be due to unwillingness from donor
to avail information and poor coordination among
disaster management agencies. Such risks are of two
types firstly, aids might be reached to the affected
people but records are not maintained. This is
transparency issue. Secondly, fund and materials
received are neither recorded nor distributed but used
or sold in the market for personal benefit by responsible
person. It is the case of corruption.

Damaged aid- Goods procured and received in-kind

can be damaged or obsolete or sub-standard because

of inappropriate storage or inadequate human and
organizational resources to manage them. This is the
risk factor causing wastage of resources.

Aid distribution- Distribution aids favoring some

individuals, groups and regions results inequality in aid

distribution. In this situation the targeted victims may
not receive disaster related aid. Urban centered delivery
of relief, unavailability of relief to the victim of remote
areas, lack of independent check or monitoring of
distribution, supplies and service directed to the area
which are not the neediest location, pressure from local
elites or political groups to violate the criteria,
unawareness of victim about their entitlement, lack of
acknowledge of receipt of aids, etc. are some red flags
in distribution of aid.

Funding duplication- There may be multiple flows of

financial and material aids from donors, agencies and

individuals. If same recipients receive fund and material
from several agencies, there will be risk of funding
duplication which is lack of transparency and results
misuse.

Ownership and sharing mechanism- Ownership of

the assets created during rehabilitation and should be

defined carefully. Likewise, sharing of expenditure
incurred during demolishes of damaged private property,
clearance and maintenance of private property needs
to be determined.

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The Nepal Chartered Accountant

June 2015

Flow of information- Flow of clear, objective and

authentic information among the stakeholder is important

to avoid speculation and promote transparency. Two
way communication is essential to get feedback and
timely correction of mistake.

Procurement- Life should not be at risk for the sake

of economy in emergency phase. Emergency

procurement procedures are followed in this phase.
However, it is not justifiable to use such procedures for
longer time. In reconstruction phase, procurement
procedures must be followed and goods and services
should be procured with due regard to economy.

Size and packaging of the contract, insufficient

competition, delivery of substandard/poor quality goods,
service or construction, procurement of goods having
imminent or past expiry dates, too narrow and too board
specifications, specifications favoring to particular
supplier, inadequate notice to bidder in emergency
situation, multiple contract award to the same company,
direct purchase or negotiated contract, unreasonably
high or low bids, award to other than lowest qualified
bidder, frequent amendment of contract, same quality
goods procured in different price etc. are the red flag
area in procurement.
Inefficiency- Maximum output should be derived while

utilizing the disaster related fund by minimizing

overlapping and wastage.

Ineffectiveness- Victims' needs should be met. While

rebuilding infrastructure, it must be suitable to the local

condition, geography and environment.

Emergency shelter- housing or land for emergency

shelter may not be as per need of the individuals,

material or cost may overpriced, payment made to the
work done before the disaster are the risk factor related
to the emergency shelter.

Misstatement- Auditor should certify that financial

statements are not materially misstated. Donors as well

as the stakeholders rely on the audited financial
statement. Thus, testing accuracy of financial statement
is the risk factor to the auditor.

Movement of goods- Quantity and quality of food and

supplies transferred from centre to distribution point

may not be verified.

EARTHQUAKE

In Nepalese context, as per media we have also seen the

mismanagement during the relief operations of 25 April
2015 earthquake. SAI Nepal should also focus on such
risk factor as well as red flag areas.

6. Reporting Disaster Audit

Reporting of disaster audit is based on ISSAI reporting
standard. In financial audits, unqualified, qualified, adverse
and disclaimer report are issued on the financial statement
related to disaster. Performance audit report of disaster
audit is prepared based on audit objectives considering
economy, efficiency and effectiveness aspect. Methodology
used, audit findings, conclusion and recommendations are
included as per ISSAI. Likewise, compliance audit reports
also include audit objectives, scope and criteria or legal
basis for disaster. Audit report is prepared separately as
per audit objectives. However, finding or conclusion and
recommendation on risk factors of disaster audit need to
be included while issuing audit report. However, as per
ISSAI, SAI can decide to conduct financial and compliance
audit together.

7. Conclusion
A disaster is a function of risk process. Disaster management
deals with minimizing disaster risk that involves preparing
for disaster before it occurs, emergency responses, recovery,
rehabilitation of the society and long-term reconstruction.
Disaster brings significant inflow of fund from national
international, private and public institutions as well as
individuals. Donors and contributors are very much concern
for maintaining transparency, accountability and the
utilization of their assistance. The government auditor has
the responsibility to evaluate whether relief funds have
been mobilized economically, efficiently and effectively.
In this connection, Auditor examines accounting records,
financial statement, statements of aid distribution,

reconstruction operations, procurement and legal

compliance aspect to provide assurance to the general
public and stakeholders. Such audit should be conducted
as per ISSAI 5500 series which includes assessing audit
risks and determine strategy. As per strategy, audit evidences
are collected to minimize the risks related to the utilization
disaster fund. Audit procedures are similar to financial,
compliance and performance audit which are essential to
assure the fund provider.
In present context of Nepal, some donors are interested to
spent money directly through their agencies. Government
of Nepal is requesting to channelize fund through Prime
Minister Disaster Relief Fund. Huge amount of commitment
has been received during donot conference organised by
the Government. Such amount will be spent using the
procedures determine by the Government or aggreement
made with donor. The audit is carried out by Auditor
General of Nepal complying ISSAI series 5500. Thus, it
is not rational to suspect the intention of the government.
It is important to ensure the contribution of the various
organizations, individual donors etc. went to the people
who actually needed help. In this regard, as an Supreme
Audit Institution of Nepal Office of the Auditor Generl
needs to be prepared to conduct the audit of disaster related
fund in accordance with the legislation and recommended
ISSAIs to assure stakeholders the propriety of fund.

8. Reference
i. Audit of Disaster Management Guideline, Office of
the Auditor General Pakistan
ii. Audit of Disaster Related aid, ISSAI 5520, INTOSAI
iii. Adopting Audit Procedures to Take Account of the
Increased Risk of Fraud and Corruption in the
Emergency Phase following Disaster ISSAI 5530INTOSAI

The Nepal Chartered Accountant

June 2015

12

EARTHQUAKE

The Great Gorkha Earthquake: Accounting Considerations

Key accounting issues arising out of the earthquake, include accounting for a) impairment assessments and valuation
of assets; b) compensation rights for damaged or destroyed assets and lost revenue/profits, c) provisions for onerous
contracts, d) breaching loan covenants, e) hedge accounting, f) going concern assessments and g) subsequent events
disclosures.

Background
Financial reporting issues
depend on the period of financial
statements, before or after the
date of earthquake. In the case
of an entity whose reporting
period and date of authorization
for issue of financial statements
w a s b e f o re t h e d a t e o f
earthquake shall assess whether
it is an adjusting or nonadjusting event.

At 11.56 am on Saturday, April 25,

2015 (12 Baishakha 2071), a massive
7.8 magnitude earthquake hit Gorkha,
Kathmandu valley, Sindhupalchowk
and 13 other districts in the western,
central and eastern part of Nepal. And,
the massive aftershocks next day and
on May 12, 2015 (29 Baishakha 2072)
killed more than 9,000 people, injured
over 20,000 people, rendered
homeless over 500,000 people and
damaged property worth billions of
dollars. The National Planning
Commission (NPC) has estimated
NRs.700.463 billion (equivalent to
US$7.005 billion) worth of total
disaster effect (damage and loss) in
21 sectors. According to NPC press
release, the top 5 disaster effected

CA. Nanda Kishor Sharma

CA. Sharma is fellow member of ICAN.
E-mail:nksco@ntc.net.np

13

The Nepal Chartered Accountant

June 2015

sectors are i) Housing and Human

Settlements (NRs.350 billion), ii)
Tourism (NRs.81 billion), iii) Industry
and Commerce (NRs.34 billion), iv)
Environment and Forestry (NRs.34
billion), and v) Education (NRs.31
billion) sectors. NPC has also
estimated NRs.666.306 billion fund
required for reconstructions and
Government of Nepal has considered
this an opportunity to make leap
forward in Nepal's development. To
raise funds for post-earthquake
reconstructions and rehabilitation,
GoN has organized "Donors'
Conference" on 25 June 2015 and
there was tremendous enthusiasm
shown by bilateral and multilateral
agencies to support Nepal's effort in
this respect. Nepal's Central Bureau
of Statistics in early June estimated
that
the
earthquakes
had lowered the
growth rate of
the country's
economic
output by about
1.5 percentage
points-to about
3.04% from an
e a r l i e r projected
4.58%.

EARTHQUAKE

Nepal is still in mourning and grief, the terror of

earthquake is still on as more than 300 aftershocks over
4 in magnitude have already hit Nepal and still on
continuously for 10 weeks. Everyone has lost something.
Some have lost their family members and loved ones.
Some have lost relatives and some friends. Some have
lost their means of living. The Earthquake demolished
Kathmandu's identity, Dharahara, the 61.88-metre tall

tower built in 1832 and rebuilt in 1835/36 to its

foundation. Similarly, several other cultural and
UNESCO's heritage sites have collapsed. The Kathmandu
valley's recognition as a cultural city with thousands of
monuments and temples has now been totally vanished
as most of the monuments and temples have been
crumbled.

Despite the great devastation and shaken psyche, the Nepalese people seem to be resilient and are trying to overcome
the fear and damage the natural calamity has caused to their property and lives. Nepal is rising.

Issues to be considered
The great Gorkha earthquake and subsequent aftershocks
have directly impacted many entities and many others have
been indirectly impacted through business relationships
they have with affected entities. There could be a number
of financial reporting issues that have emerged as a result
of these incidents. This article tries to discuss on for
recognizing, measuring, and disclosing losses from such
and similar natural disasters.
The following are the key financial reporting considerations:
1. Reporting period of the financial statements
Financial reporting issues depend on the period of financial
statements, before or after the date of earthquake. In the
case of an entity whose reporting period and date of
authorization for issue of financial statements was before
the date of earthquake shall assess whether it is an adjusting
or non-adjusting event.
a) If the impact of the earthquake occurred after the
reporting period has affected the going concern

presumption and is no longer appropriate, then this is

an adjusting event under NAS 10 "Events after the
Reporting Period" and the financial statements should
be adjusted.
b) As per NAS 10, if the impact of the earthquake has not
affected going concern presumption but impact is
considered material, it is an non-adjusting event and
the entity should provide the following subsequent
events disclosures in its financial statements:
the nature of the event
an estimate of its financial effect or a statement that
such an estimate cannot be made.
If an entity with a 32 Ashad 2072 year end, has been
impacted by the earthquake of 12th Baishakh 2072, it
should consider the following:
Items of property, plant and equipment (PP&E) and
inventory damaged or destroyed,
Compensation rights for damaged or destroyed items
of PP&E, inventory and lost revenue/profits resulting
from the earthquake,

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June 2015

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EARTHQUAKE

Costs of restoring, purchasing or constructing new items

of PP&E,
Other
considerations including the need to recognise

provisions for onerous contracts, the potential for

breaching loan covenants, the accounting for future
losses, clean-up costs, impact on hedge accounting and
going concern assessments.
Accounting considerations related to each of these items
are dealt in subsequent paragraphs.
2. Property, Plant and Equipment (PP&E)
The impact of the earthquake, for example physical damage
to items of PP&E and reduced revenue forecasts, is an
indicator of impairment. And hence, impairment of items
of PP&E must be recognised in accordance with NAS 36
Impairment of Assets. It requires:
i) an impairment test to be performed when there is
an indicator of impairment,
ii) reassessment of the residual values and useful lives
of items of PP&E, and
iii)writing off the items of PP&E.
When accounting for damage to PP&E, the key factor is
whether the asset will be demolished as a consequence to
the earthquake. Certain items of PP&E may have been
damaged to such a degree that it is necessary to permanently
withdraw the asset or part of it from use. If only a part of
an asset is damaged, then the damaged part should be
derecognised, even if it had not been separately depreciated.
Any gain or loss is recognised in profit or loss for the
difference between the net proceeds received, if any, and
the carrying amount of the asset.
NAS 16 Property, Plant and Equipment requires the
impairment and derecognition of PP&E and any potential
compensation claims relating to PP&E to be treated as
separate economic events and accounted for separately.
Therefore, it is not appropriate to net the events off and
not record an impairment loss because there is an insurance
claim related to the same impaired asset. These economic
events should be accounted for separately and in the period
in which they occur. Separate consideration of the events
may mean that a loss from the impairment of PP&E is
recognised in a reporting period before the compensation
claim is recognised.

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The Nepal Chartered Accountant

June 2015

3. Intangible Assets and Goodwill

NAS 36 requires goodwill and any intangible assets with
an indefinite life to be tested for impairment annually and
to the extent to which an impairment indicator exists. Fix
life intangible assets already put into use also need to be
tested for impairment when there is an indicator of
impairment.
The impact of the earthquake is an impairment indicator
triggering the requirement for an impairment test to be
performed in accordance with NAS 36 for these assets.
Consequently, capitalised IT systems, capitalised
development costs and goodwill/other intangibles attached
to impacted businesses may be impaired as a result of the
earthquake.
4. Inventory
Any damaged inventory (semi-finished, during production
or at warehouse) must be measured at the lower of cost
and net realisable value in accordance with "NAS 2
Inventory" with any write down recognised in profit or
loss. Any insurance claim for damaged inventories must
be recognised separately to the write down. These economic
events (writing down and compensation) should be
accounted for separately and in the period in which they
occur.
5. Measuring the values of damaged assets
There are various challenges and valuation difficulties in
valuing damaged assets such as buildings and inventory
and investment properties. Under NFRS, when measuring
fair value, the asset is assessed in its present condition,
that is, it shall reflect market conditions at the end of the
reporting period and does not consider future capital
expenditure that will improve or enhance the property and
does not reflect the related future benefits from this future
expenditure. Therefore, the fair value of properties, as
reported in entities' financial statements, must reflect their
current state at the end of each reporting period. There are
often practical difficulties in gaining access to assets to
assess the values required for financial reporting, whether
that is fair value or net realisable value.
6. Financial Assets
The recoverability of financial assets may also be directly
or indirectly impacted by the earthquake. For example, an

EARTHQUAKE

entity should assess the collectability of trade receivables,

loans or mortgage receivables from businesses directly
impacted by the earthquake. An entity should also consider
whether any loan or mortgage facilities secured with assets
that have been damaged by the earthquake are impaired.
Disclosure of impairment losses, to the extent significant
should be provided in accordance with NAS 1 Presentation
of Financial Statements, NAS 36 and NAS 39 Financial
Instruments: Recognition and Measurement.
7. Compensation from third parties
Certain entities may have insurance policies under which
they will be compensated for damage to an item of PP&E,
other assets or lost revenue/profits caused by an earthquake.
The question as to whether an entity is covered under its
insurance policy for damages to non-financial assets and
for loss of revenue/profits is one of fact and will depend
on the specific terms of the insurance policy. Additionally,
recognition of any insurance proceeds receivable will
require evaluation of coverage in a given situation as well
as an analysis of the ability of an insurer to satisfy the
claim. Legal advice should be sought if uncertainty exists
regarding the validity of a claim.
As per NAS 16, income related to the compensation for
damaged PP&E, other assets or lost revenue/profits should
be recognised when the damage giving rise to any loss or
impairment has occurred and the entity has an unconditional
contractual right to receive the compensation. That is, such
compensation from third parties should be recognised
when it is virtually certain that the compensation will be
received. This is also consistent with the guidance in NAS
37 Provisions, Contingent Liabilities and Contingent Assets.
Contingent asset disclosure may be appropriate in
circumstances where the entity is unable to recognise the
compensation. Therefore it is possible that recognition of
the loss or impairment may occur at a different point, and
even in a different reporting period, from the recognition
of the compensation. However, there is no specific guidance
in NFRS in relation to insurance contracts that compensate
the holder for a loss event related to other assets (excluding
items of PP&E such as inventory) or lost revenue/profit.
If the entities receive earthquake compensation from the
government, they will need to consider the application of
NAS 20 Accounting for Government Grants and Disclosure

of Government Assistance if the entity is considered

commercial entity, not public entity. Taxation effect shall
also be considered by all entities, which is not covered in
this article.
8. Subsequent expenditure, including acquisition of
replacement assets
As a result of the earthquake, an entity may incur costs in
relocating assets or installation of assets at a more suitable
location. Subsequent expenditure on an item of PP&E is
recognised as part of its cost only if it meets the general
recognition criteria, that is, it is probable that future
economic benefits associated with the item will flow to
the entity and the cost of the item can be measured reliably.
NAS16 requires that the recognition of costs as part of the
carrying amount of an item of PP&E ceases when the item
is in the location and condition necessary for it to be
capable of operating in the manner intended by
management. Ordinarily, costs of relocating or reorganising
part or all of an entity's operations are not included in the
carrying amount of an item of PP&E. However, to the
extent an item of PP&E cannot operate in the manner
intended by management, for example, because the premises
has been damaged by the earthquake, it may be possible
to capitalise these costs. However, in these circumstances
it will be necessary to derecognize any previously capitalised
installation or transport costs. To the extent to which the
relocation is temporary in nature, immediate expensing of
the relocation costs (both for initially relocating and
subsequently moving back) is likely to be appropriate.
Prior to reaching a conclusion entities will need to consider
the specific facts and circumstances to which the costs
relate.
Expenditure incurred to acquire safety or environmental
equipment may be recognised as a separate item of PP&E
if it enables the future economic benefits of other assets
to be realised, even though the expenditure itself does not
give rise directly to future economic benefits.
9. Onerous contracts
The earthquake may have resulted certain contracts
becoming onerous (in which the unavoidable costs of
meeting the obligations under the contract exceed the
economic benefits expected to be received under the

The Nepal Chartered Accountant

June 2015

16

EARTHQUAKE

contract). For example, the lessee of a building damaged

by the earthquake who is still required to pay the lease
payments despite being unable to use the premises. The
present obligation of an onerous contract is required to be
immediately recognised and measured as a provision.
However, the existence of "force majeure" clauses within
contracts should be considered when assessing whether
the contract is onerous.
10. Loan covenants
Impairments and derecognition of assets as a result of the
earthquake could impact financial position ratios specified
in loan covenants. Breach of loan covenants will need
action by the entity to secure a waiver. If a waiver is not
obtained before the reporting date, then debt will need to
be classified as a current liability, even if a waiver has
been obtained by the time the financial statements have
been authorised for issue. Depending on the nature of the
breach and when it was rectified, disclosure in the financial
statements may also be necessary under NFRS 7 Financial
Instruments: Disclosures.

and measurement impacts on assets and liabilities that may

need to be considered.
13. Held-to-Maturity Securities
Entities that are affected by this Earthquake (or any other
natural disaster) may decide to sell or reclassify investments
that were previously classified as held-to-maturity.
Determining whether a sale of a held-to-maturity security
is likely does not call into question an entity's intent to
hold other securities to maturity as this will depend on the
specific facts and circumstances.
14. Impacts of reduced profitability
Entities impacted by the earthquake may need to consider
whether the impact on profitability will affect their ability
to:
recover other assets recognised in the financial

statements such as any deferred tax assets associated

with temporary differences and tax losses
meet any debt covenants

11. Future operating losses and clean-up costs

15. Additional Disclosures Requirement

Expected future operating losses as a result of the

earthquake, even if probable, are not provided for unless
they relate to an onerous contract. Similarly, future expected
costs of clean-up would not meet the definition of a
provision until the clean-up is performed and the costs
incurred. Disclosure of costs incurred, to the extent
significant should be provided in accordance with NAS 1.

An entity impacted by the earthquake may consider

following additional disclosures as a part of their regular
reporting and/or periodic financial reporting:

12. Going concern

If significant doubt exists as to whether an entity can
continue to operate in the foreseeable future as a result of
the damage caused by the earthquake, then the going
concern assumption may no longer be appropriate. The
assessment of the validity of the going concern resumption
shall be made an entity whether directly or indirectly
impacted. This assessment may be necessary even though
the entity was impacted by the earthquake after the reporting
date.
Where the financial statements are prepared on other than
going concern basis, the basis must be disclosed in the
financial statements. Preparation of financial statements
on other than going concern basis will also have recognition

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The Nepal Chartered Accountant

June 2015

i.

To the extent an entity believes they will not be in

a position to meet statutory filing deadlines,

ii. Continuous disclosure obligations to the extent to

which the impact of the earthquake is expected to
have a material impact on the entity's share price.
iii. Earthquake expenses for minor repairs and
maintenance for PP&E and insurance receipts for
business interruption should be shown as separate
items in the operating cash flows section. Any
insurance recoveries for PP&E should be classified
as investing cash flows, even if the insurance
proceeds are not used to replace the PP&E.
Judgment may be required in classifying insurance
recoveries where one receipt from an insurer covers
both business interruption and damage to PP&E
iv. A description of contingencies from the event that
have not yet been recognised in the financial
statements but that are reasonably expected to

EARTHQUAKE

impact the entity's financial statements (e.g. future

losses and costs and probable future insurance
recoveries);
v.

Amount of the exposure to credit loss and how

that risk was evaluated;

vi. Potential loss of customer base and the related

revenue recognition;

vii. Major disruptions in supply chain that impact

inventory;
viii. Any significant uncertainties in the amounts
recognised in the financial statements;
ix. The accounting policy on the treatment of
impairment losses and insurance recoveries in the
financial statements.

(Reference materials: NFRSs, National Planning Commission's Press Release, 12 June 2015 and KPMG publication on accounting
considerations related to Natural Disasters, June 2011, etc. Photo courtesy: US Geological Survey and National Seismological
Centre)

The Nepal Chartered Accountant

June 2015

18

EARTHQUAKE

Fiscal and Monetary Response:- Earthquake Nepal - 25/4

The impact of disasters on an

economy will depend on many
factors like the nature of the
shock, the size and structure of
the economy, population
concentration, per capita
income, financial depth,
governance, and openness. In
the short term, disasters typically
result in a contraction in
economic output and a
worsening in external and fiscal
balances.

CA. Anal Raj Bhattarai

CA Bhattarai is fellow member of ICAN.
Email: bhattarai@gmail.com

19

The Nepal Chartered Accountant

The occurrence of natural disasters

has increased in frequency across the
globe over the past 50 years. Estimates
of the economic and financial losses
from natural disasters have also risen.
While the reporting of natural disasters
has improved, these upward trends
are due primarily to a documented
rise in the number and intensity of
climactic disasters, and to an increase
in the concentration of people and
physical assets in areas more exposed
to disasters.
Research has found that natural
disasters have a significant negative
impact on growth and poverty. The
impact of disasters on an economy
will depend on many factors like the
nature of the shock, the size and
structure of the economy, population
concentration, per capita income,
financial depth, governance, and
openness. In the short term, disasters
typically result in a contraction in
economic output and a worsening in
external and fiscal balances. The
impact is sometimes alleviated by an
increase in transfers from abroad.
The macroeconomic policy response
to a major catastrophe involves some
combination of reserves drawdown,
new financing, and macroeconomic
adjustment. Adequate and timely
external financing can help address
immediate financing gaps and limit

June 2015

the need for contractionary macro

policies that aggravate the adverse
effects of the shock on the most
vulnerable. Against this backdrop,
role of Central Bank's as guardian of
the Nepal monetary system comprises
three strands:
1. Operating monetary policy so as
to maintain price stability, that is,
to maintain sound money;
2. Promoting the maintenance of a
sound and efficient financial
system;
3. Issuing of currency.
It should be noted that the implications
for the Bank would be very different
as between a disaster centred on
Kathmandu- where it and a majority
of the major financial institutions are
headquartered - and one in another
rural area. In the former case, the
Bank would need to contend with
potentially serious disruption to its
own, and to other financial
institutions', head office and wholesale
market capabilities, as well as with
the wider financial market and
economic implications.
By contrast, 25/4 earthquake centred
at Lamjung, Gorkha, Sindupalchok
etc. - may be a simpler scenario for
the Central Bank to respond to, but
probably of greater consequence in
terms of the economic impact. But in

EARTHQUAKE

case of Kathmandu which has more financial exposure the

central bank faces the full range of operational and policy
challenges that the Bank would need to deal with.
In much of our thinking about the sorts of capacity we
need to have to be able to respond effectively to a midregion-centred earthquake, we have to focus on what the
pressing demands would be the immediately following the
event. It is during this period that:
1. Many staff would be either unavailable for work, or
unable to get to work;
2. The Bank's head office building may be unoccupiable
or, if occupiable, without essential services (electricity
a n d w a t e r s u p p l y, s e w e r a g e c o n n e c t i o n ,
telecommunications links etc);
3. There would likely be widespread uncertainty, locally
and abroad, about the nature and extent of the disaster,
about what it means for Nepalese financial markets,
including whether they remain "open", and about the
economy more generally.
Against this back-drop, the main short-run operational
priorities for the Bank have been seen as falling into the
following areas:
1. Maintenance of a critical level of senior management
capacity, recognising that the normal complement of
senior management may not be in a position to perform
normal duties;
2. Maintenance of communications links.
3. Back-up power supply for the head-office building.
The Bank has a back-up generator in the basement of
the building, and maintains fuel reserves sufficient for
it to run for several weeks;
4. Back-up sites for the operating systems the Bank
provides for the financial system. These operations
comprise exchange settlement accounts across which
the banks settle each day's banking business.
In the case of financial markets, the immediate demand
following a major disaster would most likely be for
information. Initially it simply would not be possible for
the Bank to provide all or much of the information that
markets would ideally like to have. Before anything
approaching an accurate assessment of the impact of a
major disaster on the economy, on the government's

accounts, or on inflation - and hence the stance of monetary

policy - would be able to be given, a fair bit of fact gathering
and analysis would be required. Having said that, it is well
known that markets abhor a vacuum, and if supplied with
no information tend to "fear the worst", possibly much
worse than is warranted. Therefore, even if the first
information that can be given is only about the extent to
which the financial system is still operational, the approach
the Bank proposes to adopt, and the time-frame within
which it is expected further information will be provided,
that would help lessen uncertainty and contribute to the
maintenance of stability.
It is also to be expected that soon after news of the disaster
is broadcast, financial institutions - at least those located
outside of Nepal- would be making assessments of what
it means for the Nepalese economy and will be reviewing
their investment and trading strategies on the basis of those
assessments. Even though a reasonably complete assessment
of the situation would probably take weeks, or months, to
complete, that would not alter the fact that those who can
would make decisions which affect Nepalese financial
markets more or less immediately - using the best
information available, no matter how imprecise or
incomplete it is. Some may choose to withdraw from the
market temporarily, which could cause markets to become
quite "thin", in which case a small number of large
transactions could cause financial market prices, like
interest rates and the exchange rate, to move quite sharply.
One thing that can be done to lessen the degree of volatility
and instability in the financial markets in the event of a
major disaster is to develop, ahead of time, a frame of
reference that might help those first "best guesses" come
out in the right ball-park, and thereby assist the development
of an appropriate sense of perspective on the situation.
Having said that, it should be underscored that this
reasonably sanguine assessment of the fiscal implications
is importantly dependent on the level of government debt
and/or the tax burden being not already high prior to the
disaster. If there were little room for manoeuvre on the
fiscal position, either tax rates would need to be increased
for a period, or, if the government preferred to borrow, the
risk premium on government debt, and thus in interest
rates more generally, would rise. In these circumstances,
borrowing, as a means of spreading the burden, to avoid

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June 2015

20

EARTHQUAKE

the efficiency and disincentive costs of higher taxes, might

not be as attractive an option as it would be if the debt
starting point were more favourable. The corollary to
upward pressure on interest rates might be public pressure
for monetary policy to be more accommodating even if
that were to mean more inflation.
How the Central Bank would most appropriately manage
monetary policy in the period following a major disaster?
It suffices to say here that if one of the problems caused
by inflation is uncertainty, then it is not obvious that
backing away from the Bank's low inflation objective
would help reduce uncertainty about the economic outlook.
To be sure, it may prove necessary for monetary policy to

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The Nepal Chartered Accountant

June 2015

accommodate a one-time shift in the average level of prices

caused by temporary shortages, but it would be important
to prevent this from developing into an on-going inflation
problem. The macro policy, including monetary policy,
response on that occasion was to try to offset the real
economy impact. But the result ended up being more - and
more persistent - inflation. From that experience, it is clear
that allowing any initial shocks to the price level to develop
into on-going inflation does not provide a way of avoiding
the loss of real income. Inflation may disguise, and
reallocate, the real cost, but it cannot bring back what has
been lost.

EARTHQUAKE

Challenges for Proper Functioning of Insurance

in the Catastrophic Event

There is a dire need to have the

insurance coverage properly
addressed for such catastrophic
susceptible properties in one
hand and on the other, the
unauthorized construction
requires to be demolished. In
the current scenario, the local
market is totally clustered and
extended in the earthquake risk
prone zones, the susceptibility
however to catastrophic event is
high in almost major areas of
business.

CA. Surendra Bhusan Shrestha

CA. Shrestha is fellow member of ICAN.
email: suren32612@yahoo.com

Due to its unique geological and

geographical characteristics, Nepal is
prone to a range of natural disasters,
such as earthquakes, and landslides.
Nepalese people are not very much
prepared to cope with these crises and
in case of earthquake; the disaster
preparedness is very low. The recent
earthquake on April 25, 2015 in Nepal
and the huge aftershocks including
another strong earthquake on May 12,
2015 has arisen a serious concern in
the strength of insurance companies
in such types of catastrophic event.
Proper functioning of insurance
markets with adequate capital and
adequate technological strength is the
need of an hour to address the
catastrophic risks and to provide value
added services to the customers at the
hard times. In absence of proper
functioning of insurance markets in
Nepal that properly addresses the risks
of earthquake in entirety and in
absence of 100% implementation of
legal frameworks by the house owners
and builders, the ongoing risks and
hazards are likely to discourage the
investment in catastrophic susceptible
properties. This may also add
susceptibility towards financing in
such catastrophic susceptible
properties by the Banks as these
problems loom at large.

There is a dire need to have the

insurance coverage properly
addressed for such catastrophic
susceptible properties in one hand and
on the other, the unauthorized
construction requires to be
demolished. In the current scenario,
the local market is totally clustered
and extended in the earthquake risk
prone zones, the susceptibility
however to catastrophic event is high
in almost major areas of business.
These events and the like have made
investors lose some confidence in
reality sector where the buildings are
not properly constructed with
maximum strength and safety. The
confidence of investors have shaken
in many cases where the residential
buildings do not match with the
industry standards or are not
appropriately covered for such risks
in the hands of the investors due to
various obvious reasons. With such
cases where the assets are not properly
covered, it has generated additional
losses to the investors.
Though in the short run, it seems it
will enhance and generate the scope
of insurance business related with the
residential and commercial buildings
to significantly grow in risk prone
areas, the insurance products,
however, should incorporate more

The Nepal Chartered Accountant

June 2015

22

EARTHQUAKE

practical and pragmatic features to mitigate the event of

further catastrophic events and to gain confidence of
international investors as well. The Insurance Companies
should go hand in hand for capitalizing the situation and
better addressing the risk mitigation strategies as the capital
base of insurance markets in Nepal is significantly small
which endangers capital constraints.
Further to have a professional and healthy insurance
business, following is very essential:
l

Implementation of more sophisticated Building Code

must be established by the Government Authorities.
Presently Insurers don't engage in very professional
underwriting practices with regard to building licenses.
The number of illegal structures is quite considerable.
Stricter compliance needs to be enforced or exclusions
may have to be imposed by insurers / Reinsurers.
Ultimately, proper risk exposure assessment must be
improved.
More insurance education of the society is required, in
particular the need to have insurance protection against
natural disasters. In the long run, we wish to see gradual
change in the culture towards insurance.
On the other hand, as we face the endangerment of the
continual effect of the catastrophic event on the
residential and commercial properties, the creation of
National Catastrophic pool may also be another option
that Government may enforce. By doing so, to retain
more in the domestic market and gradually become
more independent from overseas Reinsurers and reduce
outflow of foreign currency. There are scope to cover
such fund in the currently established Nepal Reinsurance
Company as well.

To cite some examples of other countries, it may be relevant

to discuss some foreign catastrophic experiences:
(a) Turkey is one of the most exposed countries in the
world to earthquakes. Around 70% of Turkey's
population and 75% of its industrial facilities are exposed
to large-scale earthquakes. Since 1984, direct property

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The Nepal Chartered Accountant

June 2015

and infrastructure losses due to earthquakes in Turkey

have frequently exceeded US$5 billion (in current US$
terms). The last major earthquake in the Marmara region
in 1999 resulted in the loss of 15,000 lives and placed
an enormous financial burden on the economy and the
government. The World Bank helped the Turkish
Government develop the Turkish Catastrophe Insurance
Pool (TCIP) to limit the financial burden earthquakes
place on the government budget, focus government
relief funds on low income residents, and access
international reinsurance capacity in a cost effective
manner. The TCIP is a legal public entity that provides
compulsory property earthquake insurance for owners
of private dwellings built legally on registered land.
(b) Similarly, in Indonesia The Indonesian Insurance
Association, supported by the Directorate of Insurance
of the Ministry of Finance, have been able to establish
a National Earthquake Insurance Pool in 2003 known
as PRGBI which was later transformed into "Special
Catastrophe Risk Reinsurance Company".
The Earthquake is a natural incident and the loss of the
human and properties significantly occur mainly due to
the disasters that occur in the Buildings and other
constructed sites. At this modern times, where most of the
advanced countries are prepared for the such risks, Nepal
should also proactively move forward to mitigate the risks
to the minimum level by introducing and instituting
adequate standards and codes, proper legal frameworks
and moreover by creating a synergy in forming a
catastrophic pool. In the current scenario, it is important
that the Government shall perform detailed study of
catastrophic risks and the coverage requirements mainly
in terms of earthquake, assess capacity of insurance
companies to take huge risks and potential to pay in the
times of catastrophic event and shall either establish special
insurance pool or enable existing insurance pool to develop
the catastrophic fund. With such establishment and changes
in Government policies including those outlined above, it
would give a new paradigm shift to the Insurance Market.

EARTHQUAKE

Lessons Learned from April 25 Earthquake for

Disaster Preparedness

While ensuring the safety and

security of organizational
data, both in electronic/digital
and hard copy format, is very
important during a disaster,
initiatives must also be in
place for accessing such data
for continuing operations at
an alternative/temporary
location.

The April 25, 2015 earthquake brought a huge disaster upon us. Every area
in the economy has been adversely affected. National Planning Commission,
PDNA Team has estimated the loss due to earthquake to be 1.89 billion and
damage to be 5.17 billion. Further, it has been estimated that the postearthquake GDP has dropped by 1.5%.

Figure: Estimation of Disaster Effect in Monitory Terms

CA. Mukund Pokharel (CISA)

CA. Pokharel is member of ICAN
Email: mukund@gmail.com

We cannot undo anything that

happened in the past, but we can
certainly be prepared for any future
disaster by learning from this incident.
We saw many business houses were
not able to quickly resume operation.
A few were badly impacted and many
more were moderately impacted
which prevented them from carrying
out their business operation in
comfortable manner for more than a
month.

When the earthquake hit the nation,

I had guessed there would have been
huge damage to the infrastructure and
the life of the people. Fortunately,
there were some favorable condition
at the time of earthquake which led
to far less damage that would
otherwise have resulted.
l

It was a Saturday - off day in our

country (think of the human
casualty that would have occurred

The Nepal Chartered Accountant

June 2015

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EARTHQUAKE

in schools, government building and offices if it were

a working day)
Electricity was cut at the time of earthquake (prevented
possible fire and children's attention diverted from TV
just before the earthquake)
Farmers were in the field in the open space for work

These favored conditions decreased the fatalities and loss

to the life, but this may not always happen. All of us know
that Nepal was in high seismic zone and still is. We were
never prepared for this level of disaster in terms of disaster
preparedness and Business Continuity Planning and Disaster
Recovery.
We have a bad habit of not listening to anything - till it
really hits hard upon us.
In this article, we will only focus on how to mitigate the
risk in our business by properly planning beforehand so
that in the event of disaster, the loss is minimum and we
can recover better post-disaster.
If we speak in terms of business, the impact of the disaster
can be roughly grouped into the flowing categories:
1. High Impact: Businesses were not able to resume
operation for many days due to infrastructure damage
and loss of life
2. Moderate Impact: Businesses were not able to resume
operation fully for many days due to equipment damage
including computers, printers, telephone lines and
internet lines.
3. Minor Impact: Business were not able to resume
operation fully due to fear.
Many businesses have lost their client files and their
working computer where the files were stored. Even there
was damage in the government offices including income
tax building. The files lost in there will have a long term
impact toward recovery.
We can never completely eliminate the risk due to natural
or man-made disasters. But we can plan and act on reducing
the impact of any future disaster in our business and human
capital.
There are three aspects of Disaster Preparedness:
1. Data Backup
2. Business Continuity and Disaster Recovery Plan
3. Move to the cloud

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The Nepal Chartered Accountant

June 2015

Data Backup
Data backup is the most important part of preparedness.
Though it is a part of BCPDRP, I have shown it separately
to highlight the importance of it. The following data should
be backed up in such a way that the same hazard in your
primary place of business cannot destroy the backup, too.
l
l
l

Your Software Database and Files

Important Legal Agreements and Contracts with third
party
Important documents regarding your company like
Registration Certificates, Employee Appointment Letters
etc.
Your Working Files in the course of your business

Digital data can be easily backed up using easy and cheap

backup solutions like online backup. If you have not
subscribed to any professional backup services, you may
do it by backing up the data on Dropbox, iCloud or Google
drive like facilities for free.
Backing up your hard copy files usually involves
photocopying them and storing at another location. But
more efficient way would be to scan those document and
backup them in online storage. These scanned documents
will be useful in the regular course of the business, too.
If you cannot use any of the online backup solution, you
may simply copy your office data periodically in a USB
Pen Drive or Hard Disk and take it home. But when you
copy the data in portable drives make sure the drive is
encrypted and the data is unusable by anyone else but you
and your authorized people if you happen to lose the
portable drive.
The data backup should be done frequently. If you backup
your data too frequently there may be no apparent benefit
from the frequent backup compared to the cost and burden
of backing up. And on the other hand, if you back up data
once in a long period of time, the data generated in between
may get lost if the disaster happens before you were able
to back up your data the next time.
Therefore, you should determine the backup frequency
based on the nature of your data and its importance.
Data backup should be secure enough to ensure that
unauthorized person cannot easily read the content without
your permission.

EARTHQUAKE

Business Continuity and Disaster Recovery

Planning
Business Continuity and Disaster Recovery Planning
(BCDRP) is an organization's ability to effectively plan
and recover from a disaster and/or unexpected event,
ultimately resuming operations as necessary after disaster.

Find out Potential Hazards

Identify all the potential hazards which can cause serious
interruption to your business, along with challenges for
resuming critical operations.
o
o
o
o
o
o
o
o
o
o
o

Your BCDRP should include, at a minimum, the following

aspects:
Identification of Critical Business Operations, Assets and
Information
The first step in BCPDRP is to find out what are the critical
operations and information of your business. The plan
aims to protect them during disaster and recover them
post-disaster.
Until you find out what to protect, you cannot put your
effort to protect them in an optimum manner. Wasting
unnecessary effort and money to protect all the assets may
not be wise.
l
l

Prepare a list with all the necessary details of the critical

organizational assets related to information systems.
Identify all critical operations for the organization, key
resources, and the necessary procedures for restoring
operations after a disaster strikes.
In addition to information system, critical organizational
assets include personnel, facilities, equipment, and other
assets. It is important to identify such assets, along with
vital information for each item, and most importantly,
what impact would they have on your business if such
assets were not readily available, destroyed, damaged,
missing, etc.
These days many organizations rely on the services of
third-party service providers. It is therefore important
to list and thoroughly document all the relevant thirdparty service providers, and the procedures the
organization will undertake for ensuring continuation
of services (as much as possible) from the third-party
service providers

Prioritization of Critical Applications and

Data
Prioritize the list of applications and data to determine
which applications or information systems get restored
first and which must be available at all times.

Fire
Flood
Earthquake
Communications Failure
Explosive accident
Bomb Threat - Civil Disturbance
Loss of Key Supplier, Customer or Employee
Data Loss or Compromise
Pandemic Influenza
Terrorist Event - Foreign or Domestic
Other

Make a formal Team

The next step is to form a formal team with clearly defined
responsibility to act in the event of disaster. They should
be familiar with the business facilities and the recovery
process. The chain of communication should be established
- that is who will inform whom in the event of disaster.
Document the members name, contact number with their
responsibility and communicate the details to the members
of your organization. You should also prepare a list of
alternative persons in case the main persons are not
available. The team will be primarily responsible in leading
the planning, testing and recovering the operation postdisaster.

Data Safety and Recovery Initiatives

While ensuring the safety and security of organizational
data, both in electronic/digital and hard copy format, is
very important during a disaster, initiatives must also be
in place for accessing such data for continuing operations
at an alternative/temporary location.
l

In the event of a disaster, immediately assess the viability

and overall ability to safeguard all available data and
supporting information systems resources. This would
include data in electronic/digital and hard copy format.
Please note, at any time if there is any perceived threat
to the safety of human life, no efforts are ever to be
made in trying to safeguard data and any supporting
information resources. Human life is the most valuable

The Nepal Chartered Accountant

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26

EARTHQUAKE

asset and is never to be compromised under any

conditions or circumstances.
If data and supporting information resources can be
effectively safeguarded or rescued immediately before,
during, or after a disaster, then authorized personnel
are to abandon such initiatives and look to protect the
lives of themselves and other personnel.
Authorized personnel are to mobilize accordingly and
assess the viability of current data, its integrity, and the
types of resources available for helping restore the
organization's business operations. This may include:
a) Using any and/or all existing data that was
successfully safeguarded and/or rescued.
b) Repairing data that may have been rescued, but was
also damaged during the disaster.
c) Obtaining backup data sets from external resources
that are currently being used.
Restore to the fullest extent possible data to a postdisaster platform for ensuring continuance of operations
for the organization.

Alternate Locations
Identify and document your organization's alternate
locations and temporary site if a disaster strikes that results
in primary facilities being uninhabitable. Resuming business
operations in a timely manner is often highly dependent
on having secondary locations where key personnel can
gather and work in an efficient manner.

Critical Recovery Location Supplies List

List down all critical supplies needed in the event of a
disaster. Critical supplies might include: food, water,
computer supplies, first aid and medicine, electricity,
internet connection, telephone line and other.

Employees and Workforce Members

Notification Procedures
You should have a formal policy and procedure for notifying
and communicating with all employees and workforce
members in the event of a disaster. Communication is the
key for resuming operation.

Testing Procedures
The Business Continuity and Disaster Recovery Plan
(BCDRP) must be tested on a regular basis for ensuring
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June 2015

its adequacy and sufficiency. It is important to discuss,

document, and assess the following:
l
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l

l
l

Dates of testing and testing results.

Various Disaster recovery scenarios, and the applicable
plans for each scenario
Comprehensive reviews of plans, personnel, teams,
activities, and relevant tasks accomplished during such
testing procedures.
Modifications and enhancements undertaken as result
of disaster testing.
Concluding thoughts.

Insurance Information
Lastly as part of the organization's Business Continuity
and Disaster Recovery Planning (BCDRP) initiatives, you
should have insurance of your facilities, equipment and
personnel.

Cloud Computing Model

The ultimate solution today for small and medium business
is the Cloud Computing model. Cloud computing is a
wider term but in the narrow context of this article, when
you run your applications from cloud service providers
like amazon, Microsoft, google and many more including
your own server connected to the internet or when you
store your files outside your own personal computer, you
may call it cloud computing.
Cloud computing brings you the following benefits which
solves many problems discussed above:
i. Universal Access: You can access your application and
data from anywhere, even when you cannot go to your
office. After the April 25 earthquake, we were not ready
to go to the tall buildings because of the fear of
earthquake for a long time. Those who had their
applications and data in the cloud were able to work
from wherever they wanted. I myself worked from
home without any problem because my company has
everything running from the cloud.
ii. No Capital Expenditure: You do not need to buy
costly servers, firewalls and other equipment. With
cloud computing everything becomes variable cost.
Pay for what you need or stop anytime. There is no
worry of your server getting destroyed due to earthquake
or fire and there is no worry of power cut.

EARTHQUAKE

iii. Reduced Costs: In the long term the cost of the cloud
computing model is less costly. For example, you do
not need to continuously maintain the server with
uninterrupted power backup.
iv. Easy Collaboration: One of the top benefit of cloud
computing is easy collaboration. You and your client
can work on the same accounting application or edit
the same document in collaboration when you are at
your home or office and the client at some distant place.
You do not have to sit in the same table for collaboration.
In the event of disaster it helps a lot.
v. No complex disaster recovery plans: In the traditionaldo it yourself model, you should take care of everything
from backing up, maintaining facility/infrastructure to
recovery in the event of disaster. In the cloud computing

model, you can choose a business class cloud service

provide with good BCPDRP of their own whereby there
very low chance of data loss and unavailability.

Summary
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Disaster may happen any time and we should always

be prepared for unforeseen circumstances
Data Backup is a must -backup your data starting from
today
Prepare a Business Continuity and Disaster Recovery
Plan to mitigate the risk and loss of future disaster
Discuss, test and update BCPDRP periodically to address
changing scenario
Consider adopting cloud service model

The Nepal Chartered Accountant

June 2015

28

EARTHQUAKE

Regulated CSR or Increased Tax

Analyzing Better Option for Rebuilding the Nation
Background

There is no legal provisions for

contribution nor reporting
requirement from Companies
Act or any related Act in Nepal
regarding CSR. However, some
of the reputed organizations are
making good CSR contributions
in various sectors. If we compare
CSR contribution with Tax
contribution, we can say that
both contributions are meant for
development of society; one
routed through Government and
another directly from the tax
payer.

CA. Santosh Ghimire (LLB, DipIFR)

CA. Ghimire is member of ICAN.
Email: santosh@ncell.com.np

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The Nepal Chartered Accountant

The recent catastrophe of earthquake

of April 25, 2015 in Nepal killed more
than 8,800 people, injured much more
and damaged of private and public
properties are estimated to be over a
million across many districts of the
country. As per the Government, loss
from the earthquake was estimated to
be around USD 10 billion which is
almost half of the Country`s GDP.
However, due to paucity of time and
technology, the Government is yet to
assess the full fledge damage and its
recovery plan. Now, the Government
is facing challenges to collect the
required fund for rebuilding the lost
sites, reconstruction of villages,
schools and other lost heritage etc.
The Government has two options to
recover from the damage, either to
increase tax rate or to seek
international support.
Only recently, the International
Conference has been concluded and
many international agencies and
countries have made commitments of
around USD 4.4 billion for
reconstruction and recovery, however,
we cannot and should not always
depend on the foreign aid, we, herein,
focus our discussion with internal
source of fund raising and
developments of business which is
only the model for sustainable
development in long run.
June 2015

Analysis of Increased Tax

Rates
Government might consider
increasing the higher tax rates to
generate the extra revenue to confront
the need of reconstruction and
recovery. The easiest way to generate
extra revenue is to impose additional
tax burden but we should not ignore
the adverse effect on employee and
business, otherwise, it can have
negative impact on the overall
economy of the country.
a) Tax at Employment level
Government might consider
levying additional surcharge on
taxation from remuneration. But,
the question arises as how far this
will be ethical and rational to
impose additional burden when
the employees who have already
lost their valuable properties and
people. Further, if the Government
intends to increase the tax for
higher salaried employees, what
should be the definition of the
higher salaried employee? What
if the people who belongs to higher
salary level has already lost their
properties due to damage of their
investments on apartments,
housing and business etc. So,
increase in tax for Income from
remuneration does not look a
viable option and can have

EARTHQUAKE

negative impact on the morale of citizen at large

defaming the Government's role on overall recovery
mechanism.
b) Tax at Business level
The tax rates for entities range from 20% to 30%, and
it is at 25% for normal business. Nevertheless, the
profitability of the Company in Nepal has to be derived
after allowing certain mandatory expenses as required
by the Labor Act and Labor Rules well. Accordingly,
10% of the net profit should be provided for employee
welfare fund and 5% of the gross profit should be
provided for housing fund. Though, in practice the
provision of 5% is not adopted, accepting the fact that
the provisions made by the Labor Act has some elements
of defect that discourages the development of business
in Nepal. Similarly, welfare provisions of 10%
mentioned in the labor rule 2050 has always been a
concern for international and national business entities
as an additional cost to the company, unlike other
countries in the world. Hence, Companies in Nepal are
not having only (20-30) % of profit as tax but much
more than this.
Since the Companies are already suffering from higher
cost burden, how could we suggest to increase the tax
at business level without amending the provisions of
Labor Act and Bonus Act.

Analysis of Corporate Social Responsibility

(CSR)
There is no legal provisions for contribution nor reporting
requirement from Companies Act or any related Act in
Nepal regarding CSR. However, some of the reputed
organizations are making good CSR contributions in various
sectors. If we compare CSR contribution with Tax
contribution, we can say that both contributions are meant
for development of society; one routed through Government
and another directly from the tax payer. In our country
Government has become the subject matter for criticism
due to untimely and unsuccessful implementation of
projects, and in such case, it is indeed a very good idea to
have some direct contribution by Companies to the society.
For this reason CSR contribution seems to be a better
option for Social development.

It is very important to analyse the CSR provisions and

reporting requirements across the world especially in India.
Sec 135 of The Companies Act, 2013 of India contains the
provisions regarding the Corporate Social Responsibly.
Accordingly, "Every Company having net worth of rupees
five hundred crore (5 billion) or more, or turnover of rupees
one thousand crore (10 billion) or more or a net profit of
rupees five crore (50 million) or more during any financial
year shall constitute a Corporate Social Responsibility
Committee of the Board who shall ensure that the Company
spends, in every financial year, at least two per cent of the
average net profits of the Company made during the three
immediately preceding financial years." Further, the Sections
contains other provisions regarding disclosure and
preference area etc.
Similarly, the European Parliament has adopted provisions
that requires Companies to disclose information on their
contribution for environmental, labor, and human rights
impacts etc. However, Companies are adopting more robust
standards on reporting under their "sustainability" or "CSR"
commitments than as provided in EU guidelines. Not only
this, UK is considered to be a leader in CSR contributing
1/2 to 1% of the pre-tax profits of UK Companies.
Now, for a developing country like Nepal, we cannot expect
to have self regulated CSR activities and transparency like
European Union but we should have a similar provisions
in Companies Act to have a mandatory contribution of
CSR activities. However, care should be taken to consider
the economic background, political scenario, role of
Government, reporting and disclosure requirements and
flexibility in decision making process so that project is
successfully completed.
The Key benefits of the having committed CSR in Nepal
than increased tax rates are as below;
l

Improper budget cycle is one of the issues of national

budget and due to this, projects are not successful or
completed on time. Through regulated CSR provisions,
we can ensure the better planning process of successful
Companies and efficient utilization of fund at low level
of overhead and administrative cost and hence, the
projects will be completed successfully on time.
Due to prevailing less trust on Government
implementation part, there will be positive feedback

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EARTHQUAKE

from the public at large and Companies will be happy

to spend the fund for the society by themselves. Though
it increases the cost of running the business, there will
be a sense of responsibilities to business community.
l

We can best utilize the role of each stakeholder after

giving them appropriate roles and responsibilities. The
Government will be playing the role of regulator,
business will be contributor, civil society will be
facilitator & technical advisor and community can play
the role of social auditor. The system of check and
balance can be embedded throughout the implementation
part.

Key Recommendations

The benefits from CSR can be achieved only when we

have successful businesses establishments. The development
of business can happen only when there is proper
environment, good legislations, long term strategies and
compliance of good governance to support to grow business
activities.
Though Government has shown its commitments to address
the disasters, it should not ignore its priority of business
development to any short term goal like collecting
commitments only from international communities. While
analyzing options for rebuilding the nation, it is
recommended that Government should wait and think
about the following key elements.
l

International Conference for Foreign Investments and

Business :
Government should facilitate the development of new
business opportunities. Advocacy from Government
level with slogan like "Nepal is safe for investment"
should be made. From sustainable point of view, It is
better to have international business than international
assistance only. Like the recent successful event of
international conference, we can organize an event to
accept and approve the foreign investments with
assurance.

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June 2015

Investor Friendly Environment, Acts and Regulations:

So as to invite and attract the international business,
Government should demonstrate friendly environment
for business set up and hassle free repatriation of fund.
Various laws, Acts, regulations should be reviewed and
updated after considering the challenges faced by
business communities. Impractical provisions of the
Act should be discarded and reasonableness of the
provisions should be judged in line with international
practices. For example there is no such provision of
welfare fund of 10% as mentioned in the Labor Act
elsewhere in the international practices.
Long term and short term immediate reconstruction
plan:
Government should have separate short term and long
term reconstruction plan. The short term plan can be
implemented from external assistance/ loan or tax
concession but the long term plan should be implemented
from the sustainable development of the business. For
immediate short term recovery, Government can
decrease customs/tax on materials used for low cost
earthquake friendly housing for few years of
reconstruction periods.
Regulated CSR provisions in Companies Act:
As discussed, complete provisions for CSR and its
regulations should be incorporated in the Companies
Act. There must be a clear and specific provisions of
CSR related to its criteria requirements, preference
areas, composition of CSR committee, disclosure
requirements, consequences for non-compliances, project
appraisal and provisions for check and balance etc.
Nevertheless, Government can always regulate and
motivate CSR activities with various facilitations and
tools. And, one of the best tools can be organization of
an award as "best CSR project" every year.

EARTHQUAKE

Humanitarian Aid: IFAF to Ensure Better

Accountability and Transparency

Background
Government agencies as aid
recipient are always criticized
for aid utilization and integrated
reporting of such aids. This
situation is more likely in a
country like ours where there is
less credible governance
processes. Therefore reporting
of aids as per IFAF will enhance
stance and image of aid
recipients of humanitarian aid
(government in particular).

CA. Chandra Kanta Bhandari

CA. Bhandari is member of ICAN.
Email: bhandarick@gmail.com

"Tracking the humanitarian dollar

through the system is currently
hindered by the lack of information
on what has been delivered to whom
and the absence of a feedback loop
that enables the people affected by
crises to say what they have received,
and when. Without this feedback or
aggregated data on what commodities
and services have been delivered, the
effectiveness and efficiency of the
humanitarian response is hard to
measure." This is what the 2012
Global Humanitarian Assistance
Report states about Humanitarian aid
delivered worldwide.
Humanitarian aid is provided for in
different situations, mostly for disaster
potential or actual hit population.
Disaster management cycle consists
of various stages. But in particular,
when disasters hits to the particular
geography, the aid in different forms
flow very quickly from a vast numbers
of donors and national/international
community requiring urgent need for
co-ordination at all stages. In the name
of urgency and quick assistance
required, there is always risk of not
maintaining proper traceable trails, at
both the providers' and recipients' end,
about how aid actually flowed.

Recent Earthquake in Nepal

and assistance received
Nepal was hit by major earthquake
in 25 April 2015 and followed by
hundreds of aftershocks. Donors and
international community stretched
their helping hands to support for
immediate recovery, relief including
rehabilitation and reconstruction.
However, they hesitated to help Nepal
through national systems. Aid
agencies were not ready to channel
their support through Prime Minister
Relief Fund and other government
agencies. This was due to low level
of accountability and transparency in
government activities. This is normal
phenomenon that where the
governance system is perceived weak
and poor performing; even corruptprone, the donors or the communities
providing assistance often hesitates
to channel aids through government
national system. However, not trusting
to the national government and
channeling support in uncoordinated
manner even pose more risk of misuse
and ineffectiveness of the aid money.
Therefore, the pertinent issue is how
to make government and other
implementing agencies more
accountable and transparent. This has
been evidenced by Haiti. Whether aid

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EARTHQUAKE

flows can be traced from donors to recipients and that the

same aid payments were often reflected consistently in the
financial reports of recipient entities is an important issue
from the perspective of greater accountability and
transparency.

International Good Practices

To ensure the necessary level of accountability and
transparency, the International Organisation of Supreme
Audit Institutions (INTOSAI) in cooperation with
International Aid Transparency Initiative (IATI) has
prepared a framework known as Integrated Financial
Accountability Framework (IFAF) where all entities are
expected to report on transfers of humanitarian aid
transactions produce and publish tables which would show
clearly all transfers (receipts and payments) of humanitarian
aid. The tables would be prepared in a simple and
standardised way, be audited and be made publically
available on the internet. The tables can be linked together
to form the IFAF. If applied to all flows of humanitarian
aid, the tables (IFAF tables) would allow donors, recipients,
citizens and auditors to trace aid from the donor to the
final recipient and vice versa.
The Donors and other support providers will save costs
because instead of receiving multiple reports from aid
recipients, they can access standardised data on all
humanitarian aid they donate as well as that donated by
others. This will provide them greater assurance that
humanitarian aid receipts and payments are correctly
recorded (because IFAF tables are audited by the entity's
external auditor) and they will have access to audited,
simplified, standardised and comparable data which can
be used for comparison and as an aid for subsequent
effectiveness assessments.
Government agencies as aid recipient are always criticized
for aid utilization and integrated reporting of such aids.
This situation is more likely in a country like ours where
there is less credible governance processes. Therefore
reporting of aids as per IFAF will enhance stance and
image of aid recipients of humanitarian aid (government
in particular). This will help government in saving cost
and time because preparing a single IFAF table is less
time-consuming than producing individual financial reports
for individual donors, and they have access to better

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June 2015

information on humanitarian aid flows, which can assist

them to optimise coordination and delivery of aid.
The SAIs would be benefitted from having financial data
in a form which assists them in constructing an audit trail,
building up an overview of a crisis, evaluating effectiveness,
cross-checking data for the entity they are auditing to
audited data available on the internet and where appropriate
follow up discrepancies and identifying which auditors
have audited the same or similar aid flows with a view to
the coordination of or collaboration on audit work.
Integrated Financial Accountability Framework (the
IFAF), is a framework within which providers and
recipients of humanitarian aid report financial and inkind transfers of aid in standardised tables. These tables
are then audited and published on the internet as open
data with the objective that data should be published
once and used often. INTOSAI proposes that the
implementation of the IFAF initiative should be taken
forward by stakeholders and that the preparation of
IFAF tables should be made a condition of receipt of
aid.

Who will prepare IFAF Table

The IFAF tables are prepared by all entities involved in
providing and receiving humanitarian aid. Humanitarian
aid may comprise international aid from public or private
sources donated for natural disasters and man-made crises,
domestic aid from private or public donors which is provided
following international appeals for aid and assistance by
the military/ or security agencies to the victims. Providers
of such aid may include the public sector - including
institutions of donor, multilateral organisations - United
Nations offices, funds and programmes and specialised
agencies and the World Bank, etc., NGOs based in the
donor or recipient countries, international non-governmental
organisations (INGOs) such as the International Federation
of the Red Cross and Red Crescent (IFRC), and other
entities. Recipient of the aid is generally the government
or government agencies of the disaster hit country. In some
cases, aid may flow directly to the victims.

EARTHQUAKE

How does IFAF work

The IFAF initiative by INTOSAI in association with
International Aid Transparency Initiative (IATI) comprises
a framework for making publically available standardised
ex-post, audited financial information on humanitarian aid
flows. The IFAF tables should be drawn up using the same
data as that used to prepare the financial statements of the
entity. The IFAF tables are the building blocks of the IFAF
framework. For a successful IFAF framework to be
constructed, all data on humanitarian aid should be included.
This means that each entity reporting on transfers of
humanitarian aid should prepare an IFAF table. An IFAF
table consists of a list of balances of transfers of
humanitarian aid into and out of the entity during the year.
The IFAF tables record transfers of humanitarian aid
(financial and in-kind) as follows:
l
l
l

Aid providers record the name of the recipient and the

amount donated.
Recipients record the name of the provider and the
amount received.
If the recipient uses the aid to implement a humanitarian
action directly, it records the project or activity
undertaken and the amount spent.
If the recipient transfers the aid to a different entity
then it records the name of that entity and the amount
transferred.
The IFAF tables should be published as open data so
that all interested parties can access and use them.

The IFAF tables use US dollars as reporting currency and

31 December as the reporting date so that they can be
compared. For entities which report humanitarian aid to
financial year ends other than 31 December, data for the
IFAF table are drawn from the different financial years
concerned so that the IFAF tables are presented at 31/12
each year.
The external auditor of the entity audits the IFAF table
and provides a statement to this effect.

How to implement IFAF in Nepal

How to implement IFAF in Nepal is a significant question.
As a recipient of humanitarian aid, government agencies
in particular Ministry of finance, Financial Comptroller
general office in coordination with Ministry of foreign

Affairs are responsible to arrange for and account for such

humanitarian aid. Other down level government agencies
and communities as second layer recipient may also be
responsible. To implement IFAF, firstly we need to create
awareness about what IFAF is and how does it contribute
better accountability and transparency which will result in
credible government. Hand in hand we need to provide
training to those involved in implementing IFAF and
preparing such tables together with public sector auditors
as well as auditors practicing privately.
Following steps has to be followed to prepare IFAF Table.

Source: adapted from INTOGOV 9250

How does IFAF Table look like

Below are the illustrations of IFAF Tables for Donors
(Providers), First level recipient, implementing agency
and direct project:
IFAF Table for Donor
Donor A

USD in '000

Financial Year XXXX

Payments:
Direct Emergency Support to Project P (Blankets)

XXX

Funding to first level recipient

XXX

Funding to implementing NGO

XXX

Total Payments for FY XXXX

XXXX

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EARTHQUAKE

IFAF Table for recipient (First level and implementing

agencies)
Financial Year XXXX

USD in '000

Receipts:
From Donor A

XXX

From Donor B (for targeted action)

XXX

From Others

XXX

Total Receipts for FY XXXX

XXXX

Payments:
Emergency Support to Action (.)

XXX

Emergency Support to Action (.)

XXX

Funding to NGO (medical; staffs and supplies)

XX

Administrative and overhead expenses

XX

Total Payments for FY XXXX

XX

Surplus of receipts over payments

Additional information and support on the IFAF are

available as follows:
l

background information on the IFAF initiative, examples

of IFAF tables already prepared and guidelines on
auditing IFAF tables and use of IFAF as a tool are held
by INTOSAI's Knowledge Sharing Committee at
http://intosaiksc.org
IATI template spreadsheets, instructions on preparing
the IATI templates (IATI Standard and Code Lists),
tools for producing IFAF tables from IFAF data through
IATI and technical support are available from the IATI
website www.iatistandard.org/ifaf
Support and practical advice can be sought from IATI
experts and from other entities which already have

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June 2015

experience of producing IFAF tables through a user

forum made available on the IATI website
http://support.iatistandard.org/forum
Issues regarding the content of IFAF tables which cannot
resolved through the forum can be addressed to
INTOSAI's Knowledge Sharing Committee at
http://intosaiksc.org

Role of Auditors in examining aid flows

As per practice of IATI, the prepares of IFAF Table (i.e.
Providers and recipient of aid) have to present the IFAF
table to the external auditor and require that they should
audit it with a view to providing an appropriate statement.
The statement is then attached to the IFAF table in the
IATI spreadsheet.
In Nepal, all the organizations irrespective of nature and
size including not-for-profit to multinational companies,
charities, schools, clubs, NGOs, local government agencies,
government agencies are under purview of statutory audit
as per respective laws under which they operate. So, the
auditor of respective organization is in better position to
promote accountability and transparency through assurance
report and recommendations. As to disaster related aid,
the auditors have to check IFAF Table presented to them
and ensure whether all aid flows are reflected properly and
ensure whether aid received has been distributed in equitable
and effective manner. As a result of examination, they
should provide an appropriate statement about IFAF Table.
References:
1. Global Humanitarian Assistance Report, 2012
2. IATI-specific guidance on the IATI Standard, the IATI
Code Lists and the IATI entry template spreadsheet
3. INTOSAI GOV 9250
4. Preventing Corruption in Humanitarian Operations, 10
December 2014

EARTHQUAKE

Chartered Accountants in Resilient Nepal

The earthquake did shake

people, but from the standpoint
of professionals it is important
to see how this can be used as
an opportunity to push
professionalism. Nepal is a USD
20 billion economy where
economic activities has
increased multiple folds in the
past two decades.

What can the profession do

to Build Back Better?
When the earthquake struck Nepal on
25 April 2015, the future for many
changed beyond comprehension. The
outpouring of selfless volunteerism
and international support was
unprecedented. Nepal has now set an
agenda for post disaster reconstruction
with the successful completion of the
International Conference on Nepal's
Reconstruction. While the quake
shook up the nation, it also provided
an opportunity to relook at the future
of individuals, professions and
organizations. When we introspect the
Chartered Accountant profession,
there are many issues that come to the
fore that can be worth pondering upon.

Transparency and
Accountability

CA. Sujeev Shakya

CA. Shakya is Fellow Member of ICAN
E-mail: sujeev.shakya@beed.com.np

When people started criticizing the

government and international/national
governmental organizations on issues
relating to transparency, the role of
Chartered Accountants in delivering
transparency was not considered.
Given that each dollar that comes into
the country or any organization; and
each rupee spent has to be accounted
and audited for, if there have been
such perennial issues relating to

transparency, then it is quite natural

for the accounting and auditing
fraternity to take a bit of the blame.
While this does not indicate that
everyone has been colluding in crime,
but surely there have been lapses.
The future of aid in Nepal will now
be guided by how the government
can be transparent in terms of
mobilizing the money received for
rebuilding. While it is easy to blame
politicians for siphoning money or
goods, let us also not forget that for
every politician who siphons money,
there have been people in the private
sector, bureaucracy and other
organizations supporting the
politicians need and greed. Therefore
it is important for the profession to
now rise to the occasion and point out
where the leakages are, and where the
misuse is taking place.

Accounting and Auditing

Standards
As there has been a lot of discussion
on accountability, there are various
areas where ICAN and related bodies
can be involved, such as drafting
standards on how relief can be
accounted for, how it needs to be
treated in the books, and how the audit
of such efforts need to be made. The

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EARTHQUAKE

discourse on accountability can be furthered by working

with different organizations towards building standards in
auditing of organizations that have been associated with
relief and reconstruction.
This will be particularly important as government spending
volume and engagement increases. Likewise capacity at
the Auditor General Office will also need to improve.
Another strategy that could be pushed would be for notfor-profit organizations spending or receiving money above
a certain threshold to require a special audit by Chartered
Accountants on behalf of the AG office.

Increase the Audit Net

Many complaints from civic activists and other public are
on many opaque areas such as the manner in which
international organizations work. There however has to be
key questions such as, what is the purview of the Nepal
audit laws? To what extent can national governments ask
questions on the conduct of international organizations?
Is there a manner in which the government can ask for
disclosure of overheads of organizations? Can there be a
format on disclosure such as that for public companies be
created where organizations are bound to make disclosures?
Can there be more organizations that can be brought inside
the audit net?

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Professionalism Is Key
The earthquake did shake people, but from the standpoint
of professionals it is important to see how this can be used
as an opportunity to push professionalism. Nepal is a USD
20 billion economy where economic activities has increased
multiple folds in the past two decades. While there is lot
of activities around the politics of associations reflected
by the enthusiasm around elections, it is also important to
introspect, how the profession is contributing in the larger
discourse of economic growth. We also need to get to a
mindset where we are open to compete around the globe
rather than remain protected. There has been many
discussions on how the profession suffers from an inward
looking myopia, but the time has now come to get this
behind us and work towards building professionalism and
adopting globalization.

EARTHQUAKE

Planned Investment in the 13th Plan and Recommended

Framework for the Coming Budget

1. Background
Budget framework should be
designed in such a way that the
fiscal deficit is pegged to the
GDP at its five percent level and
the rest of the expenditure
requirements are met by the
revenue and foreign grants.
Sticking to this basic discipline
or condition, the fiscal policy
could be made as much
expansionary as possible.

The 13th Development Plan (2013/142015/16), which is completing its

second year in mid-July 2015, had
estimated the amount of gross fixed
capital formation (GFCF) at Rs.
1471.56 billion at 2012/13 constant
price during the Plan's three-year
period. The government and private
sectors' GFCF was estimated at Rs.
464.01 billion and Rs. 1007.56 billion,
respectively accounting for 31.5

percent and 68.5 percent of the total

GFCF. During the Plan period, the
shares of total GFCF projected for
the agricultural and non-agricultural
sectors were 15.5 percent and 84.5
percent respectively while the industry
and services sectors shared 16.2
percent and 68.3 percent respectively.
Of the total GFCF during the Plan
period, the sectoral shares of financing
from the government and private
sectors were estimated as follows:

Table 1. Sectoral Percentage Shares of Government and Private Sectors in Plan's

Total GFCF (in descending order) and Related Indicators

Mr. Tula Raj Basyal

Mr. Basyal is Former Executive Director, NRB,
and Former Senior Economic Advisor, GoN
Email: tula.basyal@fulbrightmail.org

Source: 13th Plan (2013/14-2015/16), NPC, July 2014

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Out of the 31.5 percent (Rs. 464.01 billion) GFCF in the

government sector, the highest share (22.0 percent) was
occupied by transport, storage and communications
followed by other community, social and personal service
activities (19.8 percent), agriculture (15.1 percent),
electricity, gas, and water (14.9 percent), education (10.2
percent), health and social work (8.6 percent), public
administration and defense (5.2 percent), etc. Construction
and real estate, renting and business activities each occupied
zero percent of the government GFCF as all of the
investment in these two sectors came from the private
sector. Likewise, out of the 68.5 percent (Rs. 1007.56
billion) GFCF in the private sector, the highest share (22.9
percent) was occupied by transport, storage and
communications followed by real estate, renting and
business activities (16.2 percent),
agriculture (15.7 percent),
wholesale and retail trade (11.2),
manufacturing industry (7.0
percent), financial intermediation
(5.7 percent), hotels and
restaurants (5.3 percent),
electricity, gas, and water (5.1
percent), etc. Public
administration and defense
occupied zero percent of the
private sector GFCF as all the
investment required for this
sector came from the
government. As share percent
of the total GFCF (government
and private), transport, storage
and communications comprised
22.6 followed by agriculture
(15.5), real estate, renting and
business activities (11.1),
electricity, gas, and water (8.2),
wholesale and retail trade (7.8),
other community, social and
personal service activities (7.4),
education (5.8), manufacturing
industry (5.0 percent), etc. The
highest incremental capital
output ratio (ICOR) was
estimated for electricity, gas, and

water at 22.0:1 followed by 8.9:1 for health and social

work, 8.7:1 for transport, storage and communications,
7.0:1 for health and social work, etc. The ICOR for
construction was at 2.0:1, the lowest among the sectors,
followed by wholesale and retail trade at 2.8:1, agriculture
at 3.0:1, education at 3.5:1, etc. (For growth and expansion
of the economy in the short-term, investment in sectors
with low ICOR should be increased and encouraged. For
increasing capacity, production and productivity in the
longer-term, investment should be fostered and promoted
in sectors with high ICORs.)
Table 2. Actual Growth Rate and Composition of GDP in
the First Two Years of the 13th Plan (Percent)

Source: 13th Plan (2013/14-2015/16), NPC, July 2014

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EARTHQUAKE

The highest growth rates projected during the 13th Plan

were in sectors like other community, social and personal
service activities (9.5 percent) followed by hotels and
restaurants (8.6 percent), transport, storage and
communications (8.4 percent), electricity, gas, and water
(8.2 percent), education (8.2 percent), health and social
work (7.7 percent), etc. The lower-side growth projections
of the Plan were with respect to sectors like agriculture
(4.5 percent), manufacturing industry (4.7 percent), mining
and quarrying (4.7 percent), etc. The actual overall growth
rate during the first two years averaged at 4.1 percent
against the Plan's target growth rate at 6.0 percent. Actual
average growth rates for two years much lower than the
Plan targets were observed in electricity, gas, and water
(target 8.2 percent, actual 2.3 percent), real estate, renting
and business activities (target 6.7 percent, actual 2.2
percent), financial intermediation (target 6.2 percent, actual
2.5 percent), etc. Actual average growth rates for two years
which exceeded/were near the Plan targets were observed
in wholesale and retail trade (target 5.6 percent, actual 6.2
percent), construction (target 5.5 percent, actual 5.3 percent),
health and social work (target 7.7 percent, actual 7.2
percent), public administration and defense (target 5.9
percent, actual 5.4 percent), etc. Likewise, sectoral share
percent of GDP in 2014/15 that exceeded the Plan targets
even for 2015/16 have been wholesale and retail trade,
other community, social and personal service activities,
education, hotels and restaurants, health and social work,
construction, and public administration and defense. The
real estate, renting and business activities occupied 8.9
percent of GDP in 2014/15, almost at 9.0 percent as
projected for the final year of the Plan, i.e., 2015/16.

2. GDP Loss on account of Earthquake

Nepal's average growth rate during the past 14 years (GDP
at 2000/01 price, Rs. 441.5 billion in 2000/01 and Rs.
760.2 billion in 2014/15) approximated 4.0 percent. Because
of political instability and transition, economic growth and
development agenda and issues received least consideration

during the period. According to IMF (World Economic

Outlook Database, April 2015), Nepal's per capita income
in 2015 at current US dollars is 762. The only other country
in Asia with per capita income lower than Nepal's is
Afghanistan, with per capita income in 2015 at current US
dollars at 672. As per the earlier available statistics in
Afghanistan, even the average growth rate (9.8 percent)
of such per capita income during the past 13 years (20032015) exceeded that of Nepal (9.0 percent). Other Asian
LDCs' per capita income in 2015 surpassed US$ 1,000
(i.e., US$ 1,284 in Bangladesh, US$ 1,146 in Cambodia,
US$ 1,333 in Myanmar, etc.). Thus, Nepal's economic
performance and condition was already low. To worsen
the situation, the earthquake of April 25, 2014 took a heavy
toll on the lives, properties, and output in the affected
districts of the country. As per the preliminary postearthquake damage assessment conducted by the National
Planning Commission (NPC), the damages of housing,
infrastructure, monuments, and other properties amounted
to Rs. 666 billion. In addition, the loss of GDP in nominal
price on account of earthquake is estimated at Rs. 36.53
billion. The loss of GDP at 2000/01 constant price on
account of earthquake is estimated at Rs. 12.07 billion.
Before the earthquake, the preliminary estimate of nominal
GDP in 2014/15 showed a growth of 11.3 percent to Rs.
2161.18 billion. After the earthquake, the preliminary
estimate of nominal GDP in 2014/15 showed a growth of
9.4 percent to Rs. 2124.65 billion. At 2000/01 constant
price, the preliminary estimate of GDP in 2014/15 would
grow by 5.0 percent to Rs. 772.31 billion before the
earthquake. After the earthquake, the preliminary estimate
of real GDP growth in 2014/15 is worked out to grow by
3.36 percent to Rs. 760.24 billion. Thus, there is a loss of
1.64 percentage point in the real GDP growth attributed
to earthquake. In nominal terms, the decline of 1.9
percentage point in the overall growth rate from the preearthquake growth estimate has been worked out among
the sectors as follows:

The Nepal Chartered Accountant

June 2015

40

EARTHQUAKE

Table 3. Pre- and Post-Earthquake Sectoral Estimates of Nominal GDP in 2014/15 (in Rs. Billion and Percent)

Source: CBS, June 2015

As shown in Table 3, the national accounts estimates at

current price computed on April 22, 2015 (pre-earthquake)
and June 8, 2015 (post-earthquake) showed sectoral decline
in output between the pre-earthquake and post-earthquake
levels as follows: Rs. 7.06 billion in real estate, renting
and business activities followed by Rs. 6.0 billion in
transport, storage and communications, Rs. 5.70 billion in
wholesale and retail trade, Rs. 3.14 billion in construction,

41

The Nepal Chartered Accountant

June 2015

Rs. 2.65 billion in manufacturing industry, Rs. 2.33 billion

in agriculture, Rs. 1.88 billion in education, Rs. 1.02 billion
in hotels and restaurants, and so on. GDP estimate from
public administration and defense did not change from the
pre-earthquake level while the output from the health and
social work witnessed positive growth of Rs. 0.07 billion.
Percentage-wise, the biggest output fall occurred in real
estate, renting and business activities (-4.6 percentage

EARTHQUAKE

point) followed by transport, storage and communications

(-3.8 percentage point), mining and quarrying (-3.8
percentage point), construction (-2.5 percentage point),
manufacturing industry (-2.4 percentage point), wholesale
and retail trade (-2.1 percentage point), education (-1.6
percentage point), and so on. In contrast, the output from
health and social work witnessed 0.2 percentage point
increment from the pre-earthquake level.

3. Financing the Fiscal Deficit

It is estimated that the fiscal deficit/GDP ratio during the
final year of the 13th Plan (2015/16) shall be 4.76 percent
(external loan/GDP ratio at 2.52 percent and domestic
loan/GDP ratio at 2.24 percent). The post-earthquake
damage assessment by National Planning Commission has
estimated the extent of such damage at Rs. 666 billion, as
mentioned before. A large portion of such damage has to
be met by the government. If the government's share is
assumed to be in line with the GFCF share in the 13th
Plan, i.e., 31.5 percent, then Rs. 220 billion needs to be
invested by the government. These investments will be
made as per the programs and budgets over the medium
term. The rest, 68.5 percent of Rs. 700 billion, i.e., 480
billion, shall be invested by the private sector. As required
by the need and necessity, the share of investment by the
government and private sector could be different. Personal
and institutional resources intermediated through banks,
other financial institutions, and capital market shall be the
major sources for financing the resource requirements in
the private sector. In the process, the continued growth
and expansion of these financial intermediaries could be
assumed as the likely outcome. Monetary policy should
be made accommodative to meet the private sector credit
needs without, of course, letting the inflation exceed the
seven percent target of the 13th Plan. Besides, the fiscal
deficit/GDP ratio in the budget should be contained at five
percent. In line with the fiscal deficit/GDP ratio in the 13th
Plan, the ceiling of external loan/GDP and domestic
loan/GDP ratio could be maintained at 2.65 percent and
2.35 percent respectively. Fiscal deficit/GDP ratio in excess

of five percent is inadvisable for maintaining inflation at

the desired level within the Plan target, ensuring confidence
in the currency system, avoiding distortions and instability
in the economy, fostering private sector investment through
the credible evaluation of costs/risks and returns for the
future, improving balance of payments (BOP) and
maintaining the foreign exchange reserve at the level
sufficient to finance imports of merchandise and services
for at least eight months as per the Plan target, reducing
the inflationary expectations, promoting saving in the
economy, avoiding the economy's exposure to possible
sudden risks and vulnerabilities to the macroeconomic
crises, etc. Therefore, budget framework should be designed
in such a way that the fiscal deficit is pegged to the GDP
at its five percent level and the rest of the expenditure
requirements are met by the revenue and foreign grants.
Sticking to this basic discipline or condition, the fiscal
policy could be made as much expansionary as possible.
The projection of some essential macroeconomic statistics
would be relevant here. The GDP at current price is
estimated at Rs. 2124.65 billion in 2014/15. On the basis
of the projection of five percent economic growth and
seven percent inflation, the GDP next year (2015/16) is
projected at Rs. 2387 billion. Fiscal deficit at five percent
of Rs. 2387 billion will be Rs. 119 billion; external loan
at GDP's 2.65 percent, viz., Rs. 63 billion, and domestic
loan at GDP's 2.35 percent, viz., Rs. 56 billion. Conforming
to GDP's five percent limit on fiscal deficit, we should
strive to mobilize the revenue and foreign grants to a greater
possible extent together with focusing on making their
maximum utilization. Besides, not making the future
generations bear the additional cost of debt servicing for
restoring the monuments and infrastructure that existed
before the earthquake struck Nepal on June 25, 2015 will
require that the amount earmarked for them should come
from revenue and foreign grants. Such a scheme will ensure
equality and justice for the future generations of Nepal, an
LDC with per capita income of less than US$ 750 in 2015
and the second lowest among all Asian LDCs.

The Nepal Chartered Accountant

June 2015

42

TAX

An Analysis of VAT Threshold Increase

Background

There is misconception that if

the transaction of a person is
within the threshold limit under
VAT and is not required to be
registered, there may be
possibility of exemption to
Income Tax as well. This is to
be noted that there should not
be any confusion as VAT is
indirect tax and Income Tax is
direct tax and are governed by
two separate Acts.

CA. Bishnu Prasad Bhandari

(LLB, DipIFRS, CCIT)

CA. Bhandari is member of ICAN.

Email: bishnu.bhandari@ncell.com.np

Any person who deals with supply of

goods or services shall be registered
under Value Added Tax (VAT) and
collect VAT. A person who deals with
the transaction, nature and the amount
thereof are the basic things which shall
have to be considered for the purpose
of registration under VAT. There is
certain threshold wherein registration
under VAT is not required even if the
person supplies taxable goods or
services. Normally, threshold is
determined keeping into consideration
the administrative capability, cost
involved and small taxpayer dealing
with the transactions.
The budget of 2072/73 has announced
the amendment in the existing
threshold of the VAT registration. With
the amendment, the new threshold
limit for the purpose of VAT
registration is Rupees Five million
instead of current limit of Rupees Two
million. In other words, if any of the
person, whose transaction during the
period of twelve months, crosses
Rupees Five million, is required to be
registered under VAT. The mandatory
VAT registration earlier was Rupees
Two million.An analysis of the impact
of increase in VAT registration
threshold is discussed below.

Existing Provisions of Value

Added Tax Act/Rules
Section 10(1)

43

The Nepal Chartered Accountant

June 2015

Every person wishing to engage in a

transaction shall apply to a tax officer
in the prescribed format for
registration, before beginning to
engage in such a transaction.
Rule 7(1)
In case any person has reason to
presume that his annual transaction
shall exceed Rs. 2 million, he shall
submit an application setting out such
conditions, to the concerned tax officer
in the format set out in schedule 1 for
registration of the transaction.
Section 9
Notwithstanding anything contained
in the Act, an exemption may be
provided to a small vendor, having a
prescribed annual taxable transaction
threshold, from the requirements of
registration and filing of tax returns
and from such requirements as may
be prescribed.
Provided that, a small vendor may, if
he desires to register his transactions
get his transactions registered upon
completing the process as referred to
in Section 10.

Amendment announced in
Budget
In case any person has reason to
presume that his annual transaction
shall exceed Rs. 5 million, he shall
submit an application setting out such
conditions, to the concerned tax officer
in the format set out in schedule 1 for
registration of the transaction.

TAX

Also, if any person has his annual transaction less than the
threshold mentioned (Rs. 5 million), there is the provision
of charging the taxes on the basis of their transaction. This
is charged based on Turnover.
Further, the mandatory requirement of VAT registration in
case of some goods and services like motor parts, hardware,
furniture, electronics, marble, discotheque, health club,
color lab, catering services etc, having transactions in the
prescribed area, has been abolished.

HLTRC Recommendation
High Level Tax Review Commission (HLTRC) has
providedthe analysis of the threshold of the transaction for
VAT. The threshold limit of Rs. 2 million was effective
since seventeen years. In case of service the threshold limit
is Rs. 1 million. A lot of changes have happened after the
year it became effective. The inflation rate today, compared
to the year the threshold was effective, is much higher
(The amount of Rs. 2 million comes to approximately Rs.
7 million todaytaking into consideration the inflation rate).
Also, the average amount of threshold limit for taxable
transaction of South Asian Countries is around USD 61,000
(Rs. 6.1million). This was one of the recommendation of
HLTRC to the Nepal Government on revision of VAT
threshold.

to keep their accounts and records for the purpose of

taxation is a challenge to the Revenue Administration.
l

Impact of threshold Increase

The existing threshold of Rs. 2 million is increased to Rs.
5 million as per the amendment made effective from July
17, 2015. Further, tax based on turnover is proposed in the
budget for the persons who do not reach their transaction
to the threshold limit. This is totally new insertion in the
Value Added Tax Act.
Following points are summarized as an impacts to various
stakeholderswhile increasing the threshold limit.
l

Why threshold required?

Various factors are taken into consideration while
determining the threshold.
l

It's very difficult to the Revenue Administration to

administer the small transaction holder taxpayer from
operationalperspective.
It may be difficult to the Revenue Administration to
understand the taxation structure, operational modality
of the small taxpayer.
The costs involved in revenue collection to the
Revenue Administration would be high if all taxpayers
including small transaction holder are taken into
consideration.
The contribution of small transaction holder taxpayer
to the total revenue may be small but the volume of
handling to these small transaction holder taxpayer
will be high resulting into burden to Revenue
Administration.
The ability of the small transaction holder taxpayer

The persons operating a small transactions have to

be stronger enough to be able to maintain their books
and records. Of course, compliance is necessary in
all aspects but it may be extra burden to small
transaction holders.

The compliance cost to the Revenue Administration

will be lesser due to increase in threshold limit as
small transaction holders will be out of purview of
the VAT.
There will not be much more impact in revenue
collection because of increase in threshold limit to
the Revenue Department as the revenue compared
to the cost to small transaction holder is lesser
anyway.
There is possibility of reduction in the number of
non-filers of VAT return due to increase in threshold
limit as the persons having less than threshold limit
are not required to file VAT return.
There is misconception that if the transaction of a
person is within the threshold limit under VAT and
is not required to be registered, there may be
possibility of exemption to Income Tax as well. This
is to be noted that there should not be any confusion
as VAT is indirect tax and Income Tax is direct tax
and are governed by two separate Acts.
A bit liberty to the persons operating their transactions
below threshold limit in maintaining their books of
account and further no need to file VAT return.
As recommended by HLTRC, mandatory
requirement of registration to the persons engaged
in supply of goods and services [Section 10(2)] on
The Nepal Chartered Accountant

June 2015

44

TAX

certain specified area has withdrawn. This has given

more leverage to the small transactions holders who
operates within the threshold limit on mandatory
requirement of VAT registration and filing VAT
return.
l

The provision of charging the tax based on turnover

to the persons who do not cross threshold limit is
totally the new provision. The monitoring and
administration part from Revenue Department is
important.

To Sum Up
The amendment made through budgetary announcement
is the increase in the threshold limit to Rupees Five million
in VAT registration. It is the welcoming step for the

45

The Nepal Chartered Accountant

June 2015

businessmen operating the small volume of transactions

to increase the threshold limit as they do not have to bother
about the VAT requirement if the transaction remains within
the limit. Further, the administrative cost of the Revenue
Administration will also be reduced with the extension of
threshold limit.
Making effectiveness in the administration of the VAT and
increase the purview of it, could be another argument
which will extend the scope of taxation. In this case, cost
of compliance and the administrative hassles to be ignored.
The VAT taxation should be levied based on supply of
goods and services with less exemption list.

EARTHQUAKE

dxfe"sDkn] k'ofPsf] Ifltsf] k'glg{df{0f / k'gM:yfkgfsf] Joj:yfkgsf] nflu

g]kfn rf6{8{ PsfpG6]G6\; ;+:yfn] g]kfn ;/sf/nfO{ pknJw u/fPsf] ;'emfj

k[i7e"dL
oxL @)&@ a}zfv !@, !# tyf @( ut] uPsf] dxfe"sDk tyf
To; k5fl8 uPsf k/fsDkn] g]kfnsf] x/]s If]qnfO{ c;/
kf/]sf] 5 . o; ljkbsf] 38Ldf b]z leq tyf aflx/ /x]sf
:jb]zL tyf ljb]zL dxfg'efjx?, ;+3 ;+:yf, tyf bft[ ;+:yf
cfbLsf] kxn lgs} g} ;fgLo b]lvPsf] 5 . ;/sf/n] /fxt,
k'glg{df{0f / k'gM:yfkgfsf] nflu h'g ?kdf k|fyldstfsf] ;fy
sfd ul//x]sf] 5 of] k|z+zgLo g} 5 .
cj jiff{ofd ;'? x'g nflu/x]sf] cj:yfdf ;/sf/n] k|fyldstfsf]
;fy lkl8tsf] nflu c:yfO af;:yfgsf] Joj:yf cljnDj
ug{ h?/L 5 eg] To;kl5 elTsPsf ;+/rgfx?sf] k'gMlgdf{0fsf]
nflu cfkm\gf] Wofg s]lGb|t ug'k{ g]{ b]lvG5 . o;sf] nflu ;/sf/
PSn}n] cfkm\gf] >f]taf6 dfq oL ;a} sfo{x? ug{ ;Dej gx'g]
ePsf]n] o; sfo{sf] nflu ljleGg ldq/fi6, :jb]zL tyf ljbzL
JolQm tyf ;+3 ;:yf tyf bft[ lgsfox?nfO{ ;d]t ljZjf;df
lnO >f]t kl/rfng ug'{ ckl/xfo{ 5 . ;'?df vf]hL tyf
/fxtsf] nflu ljleGg ldq/fi6, :jb]zL tyf ljb]zL JolQm
tyf ;+3 ;+:yfaf6 7"n} ;xof]u k|fKt ul//x]sf] 5 eg] o;df
cem plgx?nfO{ ljZjf; lbnfO{ pTk]/Lt ug{ ;lsof] eg]
k'glg{df{0f / k'gM:yfkgfsf] nflu cfjZos >f]t kl/rfngsf]
nflu ;xh x'g] b]lvG5 .

bft[ lgsfosf] d"Nof+sg

;/sf/n] k|wfgdGqL /fxt sf]ifdf /sd hDdf u/L Psf/
k|0ffnLaf6 g} k'glg{df{0f / k'gM:yfkgfsf] sfd cufl8 a9fpg]
lglt ckgfPsf] 5 of] Hofb} pQd gLlt ePtf klg To;df
s]lx bft[lgsfon] cfz+sf JoQm u/]sf] cfef; eO/x]sf] 5 .
;'zf;g, ;fj{hlgs >f]tsf] k"0f{ ;b'kof]u / j[xt ljsf;sf
nflu ;jn ;fj{hlgs ljQLo Joj:yfkg ;/sf/sf] /0fgLltssf]
?kdf :jLsf/ ul/Ptf klg sdhf]/ of]hgf, ah]6 sfof{Gjogdf

a9\bf] cg'zf;gxLgtf, ck|efjsf/L vr{ lgoGq0f / ;fj{hlgs

vl/bdf v'sn
' f]kgfsf] cefjsf] sf/0faf6 s]Gb|Lo tyf :yflgo
txsf ljsf; of]hgf sfof{Gjogdf a9L Fiduciary Risk ePsf]
s'/f PEFA Assessment nufPt ;/sf/ :jod\n] ;DkGg u/]sf
d'NofsFg k|ltj]bg nufot Transparency International/ cGo
cGt/fli6o ;+:yfsf] k|ltj]bgaf6 klg b]lvg cfPsf] 5 . To;df
klg clxn] xfd|f] :yfgLo lgsfodf lgjf{lrt hg k|ltlglw
gePsf] sf/0faf6 :yfgLo :t/sf] ljQLo Joj:yfkgdf bft[
lgsfox? ljZj:t x'g ;ls/x]sf 5}gg\ . oxL cj:yfdf
pgLx?af6 ;lhn} k|wfgdGqL /fxt sf]ifdf cfjZos /sd
hDdf x'g] s'/fdf cfz+sf /x]sf] 5 .

;/sf/sf] d'Nof+sg
k'glg{df{0f / k'gM:yfkgfsf] nflu Ps4f/ gLlt gkgfpg] xf]
eg] e"sDkaf6 Iflt ePsfx?n] Ifltsf] dfqf cg';f/ ;+dl' rt
Ifltk"lt{ gkfpg] / Iflt ePsfx? Ifltk"lt{ lngaf6 a+lGrt
x'g ;Sg] x'G5 . To:t} bftfn] o; k|of]hgsf] nflu 5'6\6}
;F/rgf lgdf0f{ u/L sfof{qmd ;+rfng ubf{ /fxt, k'glg{df{0f
/ k'gM:yfkgfsf] Joj:yfkg nfut Hofb} a9\g] / lkl8tn]
bftfn] k|bfg u/]sf] /sdsf] Hofb} Go"g c+z dfq k|fKt ug]{
cj:yf ;[hgf x'G5 . ;/sf/sf] ;+/rgf k|of]u u/L Ps4f/
k|0ffnL ckgfpbf Joj:yfkg nfut Go"g x'g uO{ lkl8tn]
kfpg] ;'ljwfsf] c+z a9\g hfg] x'G5 . To;}n] ;a}sf] ljZjf;
lnP/ Ps4f/ lglt ckgfpg]df ;/sf/ k|ltj4 b]lvG5 . o;sf]
nflu ;/sf/n] cfkm\gf] tkm{af6 ;a}nfO{ /sdsf] b'?kof]u gx'g]
s'/fdf ljZjf; lbnfpg h?/L 5 .

;/sf/sf] bfloTj
bft[ lgsfonfO{ Psf/ lglt cGt/ut cfZj:t kfg]{ bfloTj
;/sf/sf] xf] . To;sf] nflu df}h'bf :yfgLo :t/sf] ljQLo
Joj:yfkg k|0ffnLdf cfjZos ;'wf/ ul/ Fiduciary Risk
The Nepal Chartered Accountant

June 2015

46

EARTHQUAKE

;lxtsf] ;+/rgf, cg'udg / k|ltj]bg

k|0ffnLsf] vfsf tof/ u/L sfof{Gjog ug]{ k|ltj4tf ;lxt
bft[ lgsfonfO{ ljZj:t kfg{ h?/L 5 .

cfz+sf JoQm u/]sf] b]lvG5 . To; sf/0fn] /fxt, k'glg{df{0f

/ k'gM:yfkgfsf]] sfo{qmd ;+rfng ug{ Ps 5'66\ } kl/of]hgfsf]
?kdf ;+rfng ug]{ u/L k|flws/0f jf cGo s'g} gfdaf6
Pp6f Special Purpose Vehicle :yfkgf u/L To;sf] 5'66}
Standard Operating Procedure tof/ u/L /fxt, k'glg{df{0f
/ k' g M:yfkgfsf] sfo{ ;DkGg ug{ ' plrt b] l vG5 .

Reduction Strategy

bft[ lgsfo;Fu ljleGg >f]taf6 s/ bftfn] cfkm\gf] vr{ s6f}tL

u/L bfg lbPsf] /sdsf] ;+dl' rt Joj:yfkg ug'{ kg]{ bfloTj
/x]sf] x'bF f ;f] /sd kf/blz{tfsf ;fy lkl8t ;Dd k'uf]; eGg]
g} pgLx?sf] d'Vo p2]Zo xf] . o; ;DaGwdf bft[ lgsfon]
bfgsf] /sd sxfF vr{ x'G5+, s'g dfWodaf6 x'G5, s;/L vr{
x'G5 eGg] s'/fdf kf/blz{tf ck]Iff u/]sf x'G5g\ . kf/blz{tfsf]
;Gbe{df cGt/fli6o ?kdf xfd|f] 5lj TotL /fd|f] /x]sf]
5}g . To;}n] olb o;nfO{ Jojl:yt ug{ ;lsPg eg] Psflt/
bftfsf] ljZjf; u'Dg] / pgLx? /sd pknAw u/fpg lg?T;flxt
x'g] x'G5 eg] csf]{ tkm{ e'sDk k|efljt If]qsf] k"glg{df0f
cleofg k| e fjsf/L ?kdf cufl8 a9fpg ;ls+ b } g .

@=

Constitute a Central Level Committee: s]lGb|o

#=

Constitutea Central Level Monitoring Committee:

g]kfn rf6{8{ PsfpG6]G6\; ;+:yfsfsf] ;'emfj

xfnsf] cj:yfnfO{ Jojl:yt ug{ ;j{k|yd bftf / ;/sf/sf]
aLrdf ;+of]hg x'g' kg]{ b]lvG5 eg] bftfnfO{ cfZj:t kfg{sf]
nflu lgDg cg';f/sf] k|0ffnL (Mechanism) ckgfpg' pko'Qm
x'g] b]lvG5 .
!=

Constitute an Organization as a Special Purpose

Vehicle to Implement Reconstruction and
Rehabilitation Programme as a special Project:

g]kfnsf] ;du| ;fj{hlgs ljQLo Joj:yfkgsf] ljleGg

If]qdf hf]lvd (Fiduciary Risk) /x]sf] / :yfgLo :t/ sf]
;fj{hlgs ljQLo Joj:yfkgdf cem a9L hf]lvd (Fiduciary
Risk) /x]sf] s'/f dflysf] k|s/0f df pNn]v eO{ ;s]sf]
5 . To;sf] ;'wf/sf] nflu ;/sf/n] ljleGg bft[ lgsfo
sf] ;xof]udf ljleGg ;' w f/sf sfo{ q mdx? ;+ r fng
ul/cfPsf] 5 . cfhsf] l:yltdf ;/sf/sf] ;fj{hlgs
ljQLo Joj:yfkgsf] l:ylt hf]lvd (Fiduciary Risk) d'Qm
5 eg]/ eGg ;lsg] l:ylt g/x]sf] x'Fbf ljleGg bft[
lgsfox?n] ;/sf/n] k'glg{df{0f / k'gM:yfkgfsf] sfo{qmdx?
ljWodfg ;fj{hlgs ljQLo Joj:yfkgsf] ;+/rgfaf6
;kmntfsf ;fy ;+rfng u/L ;dodf /fxt, k'glg{df{0f
/ k'gM:yfkgfsf] sfo{ ;DkGg ug{ ;Sb5 eGg] s'/f df

47

The Nepal Chartered Accountant

June 2015

txdf
bftfsf] k|ltlglw ;lxt ljleGg lj1x? -h:t} rf6{8{
PsfpG6]G6\; ;+:yf, jf/ sfplG;n, d]l8sn sfplG;n,
OlGhlgol/ sfplG;n, a}s; Pzf]lzPzg cfbLsf] k|ltlglwTj
;lxt_ ;lDdlnt pRr :t/Lo ;ldlt agfpg] h;n] vr{
Joj:yfkgsf] nflu of]hgf th'd{ f ug],{ vr{sf] nflu >f]tsf]
kl/rfng ug],{ ul/Psf vr{sf] cg'udg, d"Nof+sg / lgoGq0f
cfbL ug]{ . xfnsf] /fli6o of]hgf cfof]usf pkfWoIfsf]
cWoIftfdf u7g ePsf] ;ldltnfO{ s]Gb|Lo :t/sf] ;ldlt
sfod ug]{ .
;+;bn] u7g u/]sf] ;+;bLo cg'udg ;ldltnfO{ s]Gb|Lo
:t/sf] cg' u dg ;ldltsf] ?kdf sfod ug] { .

$= Constitutea District Level Committee: s]Gb|Lo pRr

:t/Lo ;ldltsf] dftxtdf /xg] u/L e"sDk lkl8t lhNnfdf
/fhg}lts kf6L{ / ljleGg lj1x? ;lDdlnt lhNnf :t/Lo
;ldlt agfpg] h;n] ;f] lhNnfsf] vr{ Joj:yfkgsf] nflu
of]hgf th'{df ug]{, vr{sf] nflu >f]tsf] kl/rfng ug]{,
ul/Psf vr{sf] cg'udg, d"Nof+sg / lgoGq0f cfbL ug]{
/ ;do ;dodf ;f]sf] k|ult s]Gb|df k7fpg] tyf vr{sf]
n]vfk/LIf0f u/fpg] .
%=

Improve Capacity and Capability at Service Delivery

Front: bftfx?nfO{

cfZj:t kfg{sf] nflu / sfd k|efjsf/L

/ kf/bzL{ ?kdf ;DkGg ug{sf] nflu ;]jf k|bfg ug]{ s]Gb|
(Service Delivery Front) nfO{ ljZj;gLo agfpg'
kb{5 . sltko k'/fgf gu/kflnsfdf k|fljlws hgzlQm
ePtf klg gofF gu/kflnsf / k|foM ;a} uf=lj=;=df
k|fljlws / bIf hgzlQmsf] cefj /x]sf]n] To:tf :yfgx?sf]
klxrfg u/L e"sDk k|efljt k|To]s uf=lj=;= tyf gu/

EARTHQUAKE

kflnsfsf] j8f sfof{nodf slDtdf Pshgf clws[t :t/sf]

sd{rf/L, Pshgf OlGhlgo/ tyf Pshgf n]vfkfn tyf
cfjZostfg';f/ :jf:Yo;Fu ;DalGwt JolQmsf] tTsfn
Joj:yf ug]{ .
^=

Provide Option of Reimbursement System to

g]kfndf w]/} ;do b]lv sfd

u/]sf cGt/fli6o ;+:yf / cGt/fli6o / /fli6o u}/ ;/sf/L
;+:yfx?n] Psf/ k|0ffnLdf lbg] ;xof]usf] cltl/Qm cyjf
k"0f{ ?kn] k'glg{df{0f / k'gM:yfkgfsf] sfo{df ;xsfo{ ug{
rfxG5g\ eg] pgLx?sf] Ps lglZrt ufpF tyf sfo{If]q
tf]sL k'glg{df{0f / k'gM:yfkgf ePsf] sfdsf] cfwf/df bft[
lgsfoaf6 ;f]wegf{ lng] u/L o; cleofgdf ;xefuL
u/fpg] . Psf/ k|0ffnLsf] ;kmn sfof{Gjog kZrft pQm
bftfx?nfO{ k"0f{ ?kn] Psf/ k|0ffnLdf cfj4 x'g k|]l/t
ug]{ k|of; hf/L /fVg] .
Development Partners:

&=

Arrangement of Performance Monitoring, Reporting

and Internal Audit: o;/L

e"sDk k|efljt lhNnf txdf

ePsf sfo{ ;Dkfbg / vr{x?sf] cg'udg (Performance
Monitoring and Internal Audit) ug{sf] nflu Pp6f lhNnf
sf] nflu Pp6f n]vfk/LIfs kmd{nfO{ lhDd]jf/L lbg] / pQm
kmd{n] dfl;s ?kdf cg'udg k|ltj]bg s]Gb|Lo pRr :t/Lo
cg' u dg ;ldltnfO{ lbg' kg] { Joj:yf ldnfpg] .

*= Preparation of Manual of Standard Operating

Proceures: /fxt, k'glg{df{0f / k'gM:yfkgfsf] sfo{qmdnfO{
s'zntfsf ;fy sfof{Gjog ug{ tyf bft[ lgsfonfO{ ;d]t
cfZj:t kfg{ Fiduciary Risk Reduction Strategy tof/
kf/L To;sf] ;+ / rgf (Structure) , cg' u dg k| 0 ffnL
(Monitoring Mechanism), sfo{ ;Dkfbg tyf ljQLo

k|ltj]bg k|0ffnL (Performance and Financial Reporting)

;lxtsf] sfo{ljlw (Manual) tof/ kf/L sfof{Gjog
ug]{ . o;sf] nflu g]kfn rf6{8{ Psfp06]G6 ;+:yf ;xof]u
ug{ tTk/ /x]sf] Joxf]/f ;xif{ hfgsf/L u/fpFb5f} .
(=

/fxt,
k'glg{df{0f / k'gM:yfkgfsf] ;xof]u, ;xfotfsf] k|flKt /
pkof]udf hjfkmb]xLtf / kf/blz{tf cfjZos kg]{ x'Fbf
/fxt sfo{nfO{ sd ljjfbf:kb agfpg lkl8tx?sf] tYof+s
tyf clen]v Joj:yf ldnfpg cfjZos 5 . /fxt,
k'glg{df{0f / k'gM:yfkgf cflbsf] nflu :jb]z tyf ljb]zaf6
k|fKt x'g] gub tyf a:t'ut ;xof]usf] k|flKt / ljt/0f
;DaGwL tYof+s tyf clen]v /fVg pko'Qm 9fFrf th'{df
u/L sfof{Gjog ug'{ kg]{ b]lvG5 . o;sf] nflu g]kfn rf6{8{
Psfp06]G6 ;+:yf ;xof]u ug{ tTk/ /x]sf] Joxf]/f ;xif{
hfgsf/L u/fpb5f} .

Preparationand Maintenance of Database:

!)= Arrangement ofTax Benefit: g]kfndf a}iffv !@, @)&@

kl5 b]vL e"sDk lkl8tnfO{ lbOPsf] j:t'ut jf gub
;xof]u lbg] AoQmL jf :f+:yf nfO cfos/ k|of]hgsf] nfuL
s/ 5'6 jf vr{ s6\6L sf] ;'ljwf lbg cfufld ah]6df
Aoj:yf ug'{ kg]{ b]lvG5 .
o;/L dfly pNn]lvt sfo{x? cufl8 a9fpg Tolt ufx|f] klg
gx'g] / o;af6 bft[ lgsfo klg cfZj:t x'g] ePsf]n] o:tf]
;+oGq tof/ u/L sf]if Joj:yfkg (Fund Management) sf]
sfo{ cufl8 a9fpg of] ;'emfj lbOPsf] 5 eg] /fli6o ljkbsf]
o; 38Ldf n]vfJoj;fosf] If]qdf ;/sf/nfO{ cfjZos kg]{
;xof]u ug{ ;+:yf x/bd tof/ /x]sf] Joxf]/f klg cg'/f]w
ul/G5 .

The Nepal Chartered Accountant

June 2015

48

Notice

g]kfn rf6{8{ PsfpG6]G6\; ;+:yfsf]] !(&cf} kl/ifb a}7saf6

IAASB's Handbook of International Quality Control,

sf] cfwf/df tof/ ul/Psf] lgDg g]kfn

n]vfk/LIf0fdfgx? ldlt @)&@ >fj0f ! b]lv :j]lR5s ?kdf / ldlt @)&# >fj0f ! b]lv clgjfo{ ?kdf nfu' ug]{
lg0f{o ePsf] 5 .

Auditing, Other Assurance and Related Service Pronouncement 2012

49

The Nepal Chartered Accountant

June 2015

Notice

The Nepal Chartered Accountant

June 2015

50

NEWS

News
SAFA Board meeting

The Institute of Chartered Accountants of Nepal successfully

hosted the 39th SAFA Board meeting in Kathmandu on
27 March 2015.

abroad was the attraction of the roundtable. The roundtable

was facilitated by the ICAN President CA. Narendra
Bhattarai. Program was formally started with opening
remarks.

Group photograph of participants at SAFA Board Meeting.

Glimpse of Round Table.

Board meeting was attended by the ICAN First President/

SAFA Past President, ICAN President and Vice President
and representative members of SAFA.

In the first session two papers were presented: 'Eight Key

Elements of PFM Success' and Macro overview of PFM
reform initiatives in Nepal - SWOT Analysis were presented
by CAPA Chief Executive Mr. Brian Blood and ICAN
President CA. Narendra Bhattarai respectively. These
papers were presented under the main session topic
"overview of PFM system and practices- Ice breakers to
initiate discussion".

CAPA PSFM Committee Meeting

The Institute of Chartered Accountants of Nepal hosted
Confederation of Asian and Pacific Accountants (CAPA)
Public Sector Financial Management (PSFM) Committee
meeting on 27 March, 2015 in Kathmandu.

Roundtable
The Institute jointly organized with the World Bank and
the Confederation of Asian and Pacific Accountants
organized Roundtable on Public Sector Financial
Management on March 28, 2015 in Kathmandu to share
the views and experience in relation to Nepal's ongoing
initiative to improve PFM system and share best practices
being followed the world for better governance and how
international experience and best practices could be
beneficial to Nepal to improve her PFM System. Public
financial management system of the government has key
role to improve governance and accountability. High
ranking government officials and experts from Nepal and

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The Nepal Chartered Accountant

June 2015

Glimpse of Round Table.

In the second session Joint Secretary from Ministry of

Finance Mr. Baikuntha Aryal presented on upstream PFM
which include planning and budgeting process, resource
management: internal and external, budget deficit, allocation
of resources and resource prioritization, growth projection

NEWS

- achievements, challenges and way forward. Dignitaries

from SAFA countries and international experts/ resource
persons and Development Partners in Nepal provided
feedback from regional perspective and the global
perspectives for improvement in Nepalese PFM initiative
in macroeconomic management.These papers were
presented under the main session topic "PFM reform
initiatives in Nepal- Macroeconomic management".
In the third session Financial Comptroller General of Nepal
Mr. Shankar Prasad Adhikary shared the success stories
of Treasury Single Account and NPSAS implementation.
Similarly, the other speaker of the panel Under Secretary,
PEFA Secretariat, GoN, Mr. Babu Ram Subedi shared the
PFM Initiatives in Nepal. Dignitaries from SAFA Countries
and International experts / resource persons and
Development Partners in Nepal provided feedback from
regional perspective and the global perspectives with
respectto treasury management and financial reporting.
These papers were presented under the main session topic
PFM reform initiatives- Treasury management and financial
reporting".
In the fourth session Assistant Auditor General, OAGN
Mr. Babu Ram Gautam shared OAG initiatives and
challenges in strengthening quality and impact of financial
and performance audit and Secretary, Public Accounts
Committee Mr. Som Bahadur Thapa shared PAC's role
and initiative as an oversight parliamentary committee to
enhance the impact of audit. Dignitaries from SAFA
countries and International experts/ resource persons,
Development Partners and participants provided feedback
from regional perspective and the global perspectives for
improvement in Audit and Assurance. Both papers covered
the main session topic PFM reform initiatives- Audit and
assurance".

Glimpse of Round Table.

In the last session CA. Nanda Kishor Sharma made

presentation on Role of PAO in pronouncing accounting
standards, auditing standards and other guidelines and the
role of accounting professionals in PFM reform initiatives.
Dignitaries from SAFA countries and International experts/
resource persons and Development Partners in Nepal
provided feedback from regional perspective and the global
perspectives for improvement in Nepalese PFM initiative
in the role of professional accountants in PFM
Reform.Papers were presented under the main session
topic "PFM reform Initiatives in Nepal- Role of professional
accountants in PFM reform".
In each session initial presentations were made by high
ranking government officials and experts and feedback
from the regional and international resource persons were
provided in regional and global perspective - how the
regional and international experience and good practice
could be beneficial to Nepal in improving PFM to bring
about resilience for better governance and economic
development.
All the five sessions in the roundtable covered main
elements of the PFM Supply Chain. The Roundtable
concluded with mutual agreement that dialogue between
ICAN and the public sector needs to harmonize relationship
to ensure the accountancy profession is contributing towards
PFM reform and high quality public sector accounting,
auditing, and financial reporting
The Manager, South Asia Region Financial Management,
the World Bank Mr. Fily Sissoko and Chief Executive of
CAPA Mr. Brian Blood gave closing remarks. At the end
of the program token of appreciations were given to the
speakers by the President of ICAN.

PFM Conference
The Institute of Chartered Accountants of Nepal jointly
organized with the World Bank and CAPA organized an
International Conference on 'PFM Reform for Nation
Building - Global and Nepalese Perspective' on 28 - 29
March, 2015 in Kathmandu. The purpose of this Conference
was discusswith relevant stakeholders to share views and
experiences in relation to Nepal's ongoing initiatives to
improve public sector financial management system and
how international experience and best practices could be
beneficial to Nepal to improve her PFM System to

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52

NEWS

bring about resilience for better governance and economic

development. This Conference was attended by high
ranking government officials and experts from Nepal
and international speakers and discussed the challenges
and exchanged their experiences in reforming and
improving public financial management in Nepal.

Hon'ble Finance Minister inaugurating the conference.

The program was formally inaugurated by the Chief Guest

Finance Minister Dr. Ram Saran Mahat. In the program
Chief Guest as well as Guest of Honor Auditor General
Mr. Bhanu Prasad Acharya thanked to the Institute for
initiation to organize such seminar in the Country. Key
note speaker of the conference Mr. Rameswore Khanal,
Former Finance Secretary gave key note speech on the
PFM and related subject matter of the country.

Hon'ble Finance Minister speaking on the Occasion

Conference was conducted in four Technical Sessions on

March 29, 2015.
In the first Technical Session three presentations were
made to spark the gist of recent developments in global
PFM.
The first presentation was made by Mr. Brian Blood, Chief
Executive, CAPA on the latest developments and issues
in public sector accounting: the overview of the public
sector accounting land scape particularly the recent period

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The Nepal Chartered Accountant

June 2015

of sovereign debt crisis, and improvement initiatives from

the accountancy profession. Similarly, the second
presentation was made by Ms. Gillian Fawcett, Head of
Public Sector, ACCA on improving public financial
management in developing countries and emerging
economies: need to explore and understand the common
issues, learn the lesson and secure effective practice.
Likewise, the third presentation was made by Ms. Sumita
Shah, Regulatory Policy Manager, Public Sector, ICAEW
on how the Governments tend to look at public finances
in the short-term with spending decisions sometimes
political driven - decisions of today effect tomorrow's
generations and an understanding of long-term commitments
are important to enable the right decisions to be made for
sustainable public finances. This session was chaired by
Mr. Sujeewa Mudalige, President CAPA.
In the second Technical Session fourpapers were presented
to spark the gist of recent initiatives, achievements,
challenges and way forward in improving PFM in Nepal.
Public Financial Management Reform is a gradual and
long-term process that requires strong political will and
commitment from the stakeholders. A sound public financial
management system contributes to reducing fiduciary risks
and improving transparency and accountability of public
expenditures. The GON's recent ongoing initiatives such
as Financial Administration Reform Program, Strengthening
PFM Project, Strengthening the Office of the Auditor
General of Nepal, Government Financial Statistics (GFS)
based new codes and classification of revenues and
expenditures, implementation of Treasury Single Account
(TSA) system, strategy to implement International
Accounting and Reporting Standards (NAPSAS), Public
Expenditure and Financial Accountability (PEFA) initiative
and other capacity building measures for PFM reform have
resulted some positive results.
The first presentation was made by Mr.Babu Ram Subedi,
Under Secretary, PEFA Secretariat. He shared the
preliminary findings of PEFA Assessment 2014. In the
second presentation Mr. Shankar Prasad Adhikari, Financial
Comptroller General of Nepal shared the success stories
of treasury single account and NPSAS implementation in
Nepal. Similarly in the third presentation Mr.Babu Ram
Gautam, Assistant Auditor General shared the peer review
result based on SAI performance measurement framework
and OAGN plans to address the recommendations. Likewise

NEWS

in the last presentation the world Bank representatives Mr.

Rajat Narula, Senior financial management specialist and
Mr. Yogesh Malla financial management specialist shared
the preliminary result of Nepal ROSC assessment-2014.
This Session was chaired by Mr.Bhanu Prasad Acharya,
Auditor General of Nepal.
In the third technical session three papers were presented
on the Future - Developments in the Public Sector Reporting
Supply Chain. The financial reporting supply chain refers
to the people and processes involved in the preparation,
approval, audit, analysis and use of financial reports. The
chain in the public sector has some differences to the
private sector, plenty of similarities, and also some unique
elements.
The first presentation was made by Mr. Gill Cox, Director
CAPA on moving from conformance to performance- a
New Zealand experience: public sector accountability is
more than just reporting the financials rather focus on
performance. A focus on performance requires setting
expectations with elected government ministers, monitoring
performance, and measuring outcomes. A case study from
a NZ government agency explains how it works.
The second presentation was made by Mr. Brain Blood,
Chief Executive, CAPA on strengthening governance and
financial management through the use of Audit Committees,
Internal audit and risk management in public sector- an
Australian experience. He focused on recently introduced
requirements in New South Wales government agencies
to maintain organizational requirements which provide
additional assurance, independent of management, on
internal audit and risk management'.
The third presentation was made by Ms. Gillian Fawcett,
Head of Public Sector, ACCA, a research paperconsolidated accrual-based public sector accounts:
experience from five OCED countries.
The third technical session was chaired by Mr. Young Jin
Park, Chair of PSFMC,CAPA.
The fourth and the last technical session conducted on The
Future - The Role of Professional Accountants in Improving
Governance and PFM.The accounting profession is well
placed to take the lead in improving public sector financial
management, including all matters associated with
governance, accounting, financial reporting and auditing.

Developed countries have strong relationship between the

government and the accountancy profession. On the one
hand, the accountancy profession is committed to protecting
the public interest and encouraging accountability and
transparency around the world. And on the other, it has a
number of significant roles to play in PFM, whether as
advisor to governments or as designer, implementer,
executer, reporter, reviewer or assurer. What needs to be
done, and what needs to change? In this technical session
two presentations were conducted.
The first presentation was made by Ms. Sumita Shah,
Regulatory Policy Manager, Public Sector, ICAEW on A
CFO at Cabinet table: A look at what the UK Government
is putting in place and what the Government of Nepal may
wish to consider.
This presentation dealt with the matter that there are more
similarities than differences between the public and private
sectors. Good FM applies in all sectors and having key
finance professionals at the top of government providing
strategic financial leadership.
The second presentation was made by Mr. Gordon Ferrier,
Head of Global Membership, Chartered Institute of Public
Finance and Accountancy (CIPFA)on CIPFA's experience
in professionalising the PFM functions in governments
around the world. The presentation explained on the work
done by CIPFA, and funded by the UK's DFID, to define
what is meant by professionalization and how it might be
a c h i e v e d , b a s e d o n C I P FA ' s e x p e r i e n c e o f
professionalization around the world. It was concluded
with a summary of key points and lessons that ought to be
taken into account in any scenario where the intention is
to create a professional cadre of PFM staff.
At the end of the program Closing Remarks was delivered
by Mr. Brian Blood, Chief Executive CAPA and Mr.
FilySissoko Manager, South Asia Region Financial
Management, the World Bank and the end of the program
token of appreciation were given to the speakers by the
President of ICAN.

Diploma in IFRS
The Institute of Chartered Accountants of Nepal conducted
Diploma in IFRS course jointly with the Association of
Chartered Certified Accountants (ACCA), UK from 4-10
April, 2015 in Kathmandu.
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54

NEWS

Collection of Relief Fund by the Institute for

Earthquake Victims

ICAN President delevering speech in Diploma in IFRS course.

The seven days course was designed to provide on depth

knowledge of International Financial Reporting System
(IFRS). ACCA representative and ICAN President
commented in the program. The course imparted sufficient
classroom training (practice) and knowledge of E-learning
system of ACCA to make the participants more competent
in the area of IFRS.The participants were given training
on different topics of IFRS.The total of 46 number
participated in the training.

The Institute of Chartered Accountants of Nepal collected

the earthquake relief amount for devastated earthquake
victims of 25, 26 April and 12 May, 2015. The Institute
collected 10000 Australian dollars and 4100 American
Dollar from CPA Australia Ltd. and Confederation of Asia
& Pacific Accountants (CAPA) respectively. In the initiation
taken by the Institute, the Institute of Chartered accountants
of Bangladesh (ICAB) and Institute of Cost and
Management Accountants of Bangladesh (ICMAB) directly
deposited 1000000 Taka (one Million Taka) and 500000
Taka (Half Million Taka) to the Prime Minister Disaster
Relief Fund through Nepalese Embassy in Bangladesh.
The Institute handed over the Cheque(Cheque No: PO:
M18887 K, of Nepal Bangladesh Bank Ltd.) of the collected
amount of NRs. 27, 04,408/- (Twenty Seven Lakhs Four
Thousand Four Hundred and Eight Nepalese Rupees) to
theRt. Honorable Prime Ministerof Nepal on 7 July, 2015.

Suggestion Submitted to the Government

The Institute has given 10 points suggestionsto the
government for the effective management of the Prime
Minister Relief Fund generated for the earthquake victims.
The Institute suggested the following 10 points to increase
the effictveness of relief fund by check and balance and
decentralization policy.
l

l
l
l
l
l
l
l
l
l

Constitute an entity as a Special Purpose Vehicle to

Implement Reconstruction and Rehabilitation Program
as a special Project.
Constitute a Central Level Committee
Constitute a Central Level Monitoring Committee
Constitute a District Level Committee
Improve Capacity and Capability at Service Delivery
Front
Provide Option of Reimbursement System to
Development Partners
Arrangement of Performance Monitoring, Reporting
and Internal Audit
Preparation of Manual of Standard Operating Procedures
Preparation and Maintenance of Database
Arrangement of Tax Benefit

A detail of submitted suggestion is found in the Journal

page no 46.

55

The Nepal Chartered Accountant

June 2015

ICAN Prsident Handing over the Cheque to Rt. honble Prime Minister
of Nepal.

Similarly, The Institute distributed the blankets to the

earthquake victims in Sankhu, Kathmandu in its own
initiation.

ICAN staffs in Relief Distribution.

NEWS

Council Member Election

Exposure Visit of Bangladesh

The Institute of Chartered Accountants of Nepal successfully

conducted seventh Council election on June 12, 2015 in
Kathmandu. 18 chartered accountant membersand
8registered auditor members filed their nomination for the
election. 10 Chartered accountant member and 4 register
auditor members were elected for 3 years from the election.

As an exposure visit, a team of two Joint Directors of the

Institute comprises Ms. Goma Raut and CA. Pushpendra
Singh visited Bangladesh from 12 to 17 April 2015.

Group photograph of candidates of 7th Council election.

ICAN Delegates Meeting with ICAB President.

Following fourteen candidates were declared elected

from voting system.

The main objective of the visit was to familiarize with the

systems and practices in ICAB particularly with respect
to education system, examination system, membership
procedure, organizational and governance structure, MOU,
MRAs and other areas of services. During the visit they
discussed with the concerned officials of ICAB and shared
the practices and experiences of both Institutes.The team
was also briefed on general economic system and political
system of Bangladesh. The team has submitted and briefed
the report on visit to the ICAN council.

S.No.

Name of the Elected Candidates

CA. Prakash Lamsal

CA. Prakash Jung Thapa

CA. Bharat Rijal

CA. Suresh Devkota

CA. Ram Prabodh Shah

CA. Sunil Jakibanja

CA. Bhaskar Singh Lala

CA. Mahesh Khanal

CA. Bhawanath Dahal

10.

CA. Jagannath Upadhyaya Niraula

11

RA. Yadav Prasad Nyaupane

12

RA. Surya Prasad Adhikari

13

RA. Ganesh Raj Rai

14

RA. Dhruba Prasad Paudel

Interaction Program on NFRS for Banks

The Institute of Chartered Accountants of Nepal organized
an interaction program on "NFRS for Banks" on Jestha
13, 2072 at ICAN premises Satdobato, Lalitpur.

Congratulation to all newly elected Members!!

Preview of Interaction Program on NFRS for Bank

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NEWS

This interaction program was participated by Council

Members and members of NFRS for Banking Committee,
Implementation of NFRS Committee, NFRS for Insurance
Life and Non-life and Accounting Standards Board. CA.
MukundaDevAdhikari presented a paper in the program.
35 persons participated in the program.

Interaction Program on Unified Directives of

NRB
The Institute of Chartered Accountants of Nepal organized
half day interaction program on Unified Directives of NRB
on 4 Ashar 2072 in ICAN premises at Satdobato, Lalitpur.

and Council Members of ICAN. 20 Professionals attended

the Program.

Member Capacity Building

The Institute of Chartered Accountants of Nepal organized
member capacity building training in Dhangadi, Janakpur
and Itahari on 4 & 5,11 & 12 and 18&19 Ashar 2072.
Member Capacity Building training was conducted on
"Company Financial Statement Preparation and
Presentation"and"Audit Process and Documentation".
Practical training provided ample opportunities to refine
the practice to the participants.

Preview of Interaction Program on Unified Directives of NRB.

Interaction program was attended by the auditing

professional in the presence of President, Vice presidents

Preview of Member Capacity Building Training.

Member News
Membership, Certificate of Practice and auditing firm
Following is the total number of Membership, Certificate of Practice and Auditing Firms and the renewal status till Ashar
31, 2072.

57

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NEWS

Students News
Eligible Certificate Distributed
The Institute of Chartered Accountants of Nepal distributed eligible certificate for June 2015 examination to the eligible
student completing pre-examination (Hall and/or Postal) test
conducted by the Institute. Pre-examination test is mandatory
for attending the chartered accountancy final examination.
The Institute is conducting pre-examination test to evaluate
the eligibility of the students to appear in the final examination.
The details are as follows:

Chartered Accountancy Final Examination

The Institute of Chartered Accountants of Nepal conducted
the chartered accountancy final examination of different
level from 1 to 9 July 2015. Due to the devastating
earthquake of April 25, 26 and May 12, 2015, examination
was postponed for a month. Institute conducted the
examination from main Office and its four branches namely
Pokhara, Birtnagar, Butwal and Birgunj. Pokhara, Biratnagar
and Birgunj are conducting CAP I and CAP II examination
while Butwal is conducting CAP I exam only. The group
wise number of applicants in different level examination
and center wise applicants were as follows.

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NEWS

The final examination is generally conducting in June and

December each year.

Membership Examination
The Institute of Chartered Accountants of Nepal conducted
the chartered accountancy membership examination of
Corporate Law and Advance Taxation in 5 & 7 July 2015.
Due to the devastating earthquake of April 25, 26 and May
12, 2015, examination was postponed for a month.
Chartered accountancy membership examination is
mandatory for the CA degree holder from ICAI. Candidates
who are successfully complete membership examination
conducted by the Institute are eligible to get the membership
of ICAN. Total number of 294 ICAI CA degree holders
applied for membership examination for this time. 283
and 278 were applied for Corporate Law and Advance
Taxation respectively.

Accounting Technician (AT) Result Published

The Accounting Technician examination result has been
published in June 1, 2015 pursuant to Accounting
Technician Bye-Laws, 2067. According to the result none
of student has been declared pass in the examination.
Examination was conducted in March 2015.

General Management and Communication

Skills
The Institute of Chartered Accountants of Nepal has been
regularly organizing GMCS training since 2011 for the,
Final, CAP III Level and Accounting Technician Students
as a part of the study.

59

The Nepal Chartered Accountant

June 2015

GMCS certificate recipants with officials.

The training aims to enhance the capacity of the students

in the real field of Management and develop
Communication Skills. Kathmandu University School of
Management (KUSOM) conducted the training as per the
agreement entered with KUSOM and The Institute of
Chartered Accountants of Nepal (ICAN) reviewed the
quality of training.
The 7th batch GMCS training conducted from 9-27 March,
2015, and 35 students participated in the practical training.
Training was mandatory to become a member of the
Institute for chartered accountant student and to get the
license for AT student.

Scholarship Distribution
ICAN awarded the scholarship amount to the students
pursuing different level of chartered accountancy courses
for the Fiscal year 2071/72. Every year ICAN grants full
and partial scholarship to the CA students studying at
different levels. Total number of students received
scholarship is given below.
S.No.
Full Scholarship Partial Scholarship
CAP I
4
16
CAP II
5
20
CAP III
0
5
Total
9
41

Total
20
25
5
50

NEWS

III. Similarly Institute publisheditsnew brochureand leaflet.

The process of reviewing syllabus for CAP II and CAP III
of June and December 2016 exam is underway.

Career Counseling

Chartered Accountancy Career Expo

The Institute of Chartered Accountants of Nepal organized
two days career expo in association with the accredited
institutions on19-20June, 2015 in Kathmandu.

The Institute of Chartered Accountants of Nepal organized

career counseling program in different parts of the country
with the aim of providing the importance and awareness
of chartered accountancy education to the interested visitors.
The program highlighted a detail deliberation on the
eligibility criteria of enrollment, future prospects,
recognition, and membership criteria of the Institute.
Program was conducted by ICAN Officials. The participants
of the program had shown keen interest on the CA education.
During the reporting period around 1000 students in
Kathmandu and outside the valley got opportunity to get
information of CA Education.

Crash Course

ICAN Staff busy in counseling.

In the expo 7 desks were setup to provide counseling of

chartered accountancy education to the interested visitors.
The accredited institutions along with the organizer ICAN
were CAI Pvt. Ltd., CCMA College Pvt. Ltd., CIMA
Academics Pvt. Ltd. Elite Institute of Management Pvt.
Ltd.(EIM), School of Banking, Business and Research
Pvt. ltd. (SBBR) and Chaitanya Institute of Management
(CIM) facilitated the visitors in the desks.

Newly Accredited Institutions

The Institute has granted accreditation for three new
institutions for running CA coaching classes during the
period of April to June, 2015. Chaitanya Institute of
Management (CIM), Kathmandu, Sagarmatha Management
Development Institute (SMDI), Kathmandu and Gyankunj
College, Kavre received accreditation from the Institute.

The Institute of Chartered Accountants of Nepal organized

14 days crash course for CAP III level students from April
19 to May 05, 2015. 50 students of CAP III level attended
the course as a bridge course for examination. Paper I, II,
III, IV, VI and VII were taught during the sessions.

President and Vice President Elected

As per the Nepal Chartered Accountants Act, 2053 and
Nepal Chartered Accountants Rules, 2061 CA. Prakash
Lamsal and CA. Mahesh Khanal as a President and Vice
President unanimously elected respectively for the first
tenure of 7th Council on 15 July 2015(Ashad 29, 2072).
CA. Prakash Lamsal served ICAN as a member of 6th
Council for first two years and Vice President for last year
of the same Council. Similarly, CA. Mahesh Khanal served
ICAN as a member of 5th Council. Congratulation!!!

Publications
The Institute has published Suggested Answer of 2014
December exam for CAP I CAP II and CAP III and Revision
Test paper (RTP) of 2015June exam for CAP II and CAP

CA. Mahesh Khanal

CA. Prakash Lamsal

The Nepal Chartered Accountant

June 2015

60

Activities

Notice

Go"gtd n]vfk/LIf0f z"Ns tyf clwstd kmfOn ;+Vofsf]

k|fjwfgdf kl/dfh{g ;DalGw ;"rgf .
kl/ifbsf] ldlt @)&! kmfNu'0f $ ut] a;]sf] !($cf} a}7ssf]
lg0f{ofg';f/ ;+:yfsf ;b:ox?n] ljleGg lgsfosf] n]vfk/LIf0f ubf{
lnOg] Go"gtd n]vfk/LIf0f z'Ns tyf kl/ifbn] lgwf{/0f u/]sf]
n]vfk/LIf0f ug{ kfpg] clwstd kmfOn ;+Vofsf] k|fjwfgdf kl/dfh{g
u/]sf] 5 . kl/dflh{t Go"gtd n]vf k/LIf0f z'Ns lgDg adf]lhd
sfod ul/Psf] Joxf]/f ;DalGwt ;a}sf] hfgsf/Lsf] nflu of] ;"rgf
k|sflzt ul/Psf] 5 . ;fy} pk/f]Qm kl/dflh{t Go"gtd z'Ns tyf
kmfOn ;+Vofsf] Joj:yf ldlt @)&@ >fj0f ! ut] b]lv lnOg]
lgo'QmLx?df nfu' x'g] ;d]t lg0f{o ul/Psf] 5 .
s_ ;+:yfsf k]zfut k|df0fkq k|fKt ;b:ox?n] tnsf a'Fbfx?df
pNn]v ul/Psf lglZrt ;+:yf tyf lgsfox? afx]ssf ;+:yf
tyf lgsfox?sf] n]vfk/LIf0f u/] afkt k|fKt ug'{kg]{ Go"gtd
n]vfk/LIf0f z'Nsdf b]xfo adf]lhd lgwf{/0f ul/Psf] 5 .
;+zf]lwt n]vfk/LIf0f
z'Ns ?=
3ju{sf btf{jfnf n]vfk/LIfs ;b:o tyf
n]vf k|fljlw1n]
uju{sf btf{jfnf n]vfk/LIfs ;b:on]
vju{sf btf{jfnf n]vfk/LIfs ;b:on]
km]nf] rf6{8{ PsfpG6]G6 ;b:orf6{8{ PsfpG6]G6
;b:on]

?= %,)))
?= !),)))
?= !%,)))
?= @),)))

v_ ;+:yfsf k]zfut k|df0fkq k|fKt ;b:ox?n] ;"lrs[t ;fj{hlgs

ljQLo ;+:yfx?sf] n]vfk/LIf0f ubf{ s"n shf{ nufgL jf lgIf]k
h'g a9L x'G5 To;}sf] cfwf/df k|fKt ug'k{ g]{ Go"gtd n]vfk/LIf0f
z'Ns b]xfo adf]lhd lgwf{/0f ul/Psf] 5 .
;"lrs[t ;fj{hlgs ljQLo ;+:yf
shf{ nufgL jf lgIf]k /sd ?=
Go"gtd n]vfk/LIf0f z'NsM ?=
!)) ca{eGbf dfly
@%,)),)))
%) ca{eGbf dfly
@),)),)))
!) ca{eGbf dfly
!),)),)))
% ca{eGbf dfly
%)),)))
! ca{eGbf dfly
#)),)))
Go"gtd
!)),)))
pk/f]Qm Go"gtd z'Nssf] clwgdf /lx s ju{sf] jfl0fHo a}s
+ x?sf]
n]vfk/LIf0f ubf{ k|fKt ug'{kg]{ Go"gtd n]vfk/LIf0f z'NsM ?= !)
nfveGbf sd x'g' x'Fb}g .

63

The Nepal Chartered Accountant

June 2015

u_ ;+:yfsf k]zfut k|df0fkq k|fKt ;b:ox?n] cGo ;"lrs[t ePsf

tyf gePsf ;fj{hlgs Pj+ lghL sDkgL tyf cGo ;+:yfx?sf]
n]vfk/LIf0f ubf{ k|fKt ug'{kg]{ Go"gtd n]vfk/LIf0f z"Ns b]xfo
adf]lhd lgwf{/0f ul/Psf] 5 .
sf/f]jf/ /sd ?=

%) ca{eGbf dfly
!) ca{eGbf dfly
% ca{eGbf dfly
! ca{eGbf dfly
^) s/f]8eGbf dfly
!% s/f]8eGbf dfly
@ s/f]8eGbf dfly

cGo ;"lrs[t tyf

;fj{hlgs ;+:yfx?sf]
Go"gtd n]vfk/LIf0f
z'Ns ?=

lghL sDkgL tyf

k|rlnt sfg"g
adf]lhd :yfkgf
ePsf] cGo ;+:yfsf]
Go"gtd n]vfk/LIf0f
z'Ns ?=

@),)),)))
!),)),)))
%,)),)))
#)),)))
@)),)))

!%,)),)))
*,)),)))
$,)),)))
@%),)))
!%),)))

;"lrs[t sDkgLsf] Go"gtd

z"Ns nfu' x'g]

!)),)))

;"lrs[t sDkgLsf] Go"gtd

z"Ns nfu' x'g]

$),)))

pk/f]Qm Go"gtd z'Nssf] clwgdf /lx ;'lrs[t sDkgLx?sf] n]vfk/LIf0f

ubf{ k|fKt ug'{kg]{ Go"gtd n]vfk/LIf0f z'NsM ?= ! nfv eGbf sd
x'g' x'Fb}g .
3_ ;+:yfsf k]zfut k|df0fkq k|fKt ;b:ox?n] ;xsf/L ;+:yfx?sf]
n]vfk/LIf0f ubf{ s"n shf{ nufgL jf lgIf]k h'g a9L x'G5
To;}sf] cfwf/df k|fKt ug'{kg]{ Go"gtd n]vfk/LIf0f z'Ns b]xfo
adf]lhd lgwf{/0f ul/Psf] 5 .
shf{ nufgL jf lgIf]k /sd ?=
% ca{eGbf dfly
! ca{ eGbf dfly
^) s/f]8eGbf dfly
!% s/f]8eGbf dfly
% s/f]8eGbf dfly
@ s/f]8eGbf dfly

Go"gtd n]vfk/LIf0f z'Ns ?

%)),)))
@)),)))
!)),)))
&%,)))
%),)))
@%,)))

Notice

_ ;+:yfsf k]zfut k|df0fkq k|fKt ;b:ox?n] /fli6o tyf cGt/f{li6o

u}/;/sf/L ;+:yfx? tyf cGt/f{li6o ljsf; ;fem]bf/ ;+:yfx?df
n]vfk/LIf0f ubf{, ;f] ;+:yfx?n] gubdf cfwfl/t ljQLo ljj/0f
tof/ ug]{ x'gfn], cg'bfg tyf cGo k|flKtsf] s"n /sdsf]
cfwf/df k|fKt ug'k{ g]{ Go"gtd n]vfk/LIf0f z'Ns b]xfo adf]lhd
lgwf{/0f ul/Psf] 5 .
cg'bfg tyf cGo k|fKt /sd ?=
%) s/f]8eGbf dfly
@) s/f]8eGbf dfly
! s/f]8eGbf dfly
%) nfveGbf dfly

Go"gtd n]vfk/LIf0f z'Ns ?=

%)),)))
@)),)))
!)),)))
%),)))

pk/f]Qm Go"gtd z'Nssf] clwgdf /lx cGt/f{li6"o u}/;/sf/L ;+:yfx?sf]

n]vfk/LIf0f ubf{ k|fKt ug'{kg]{ Go"gtd n]vfk/LIf0f z'NsM ?= !
nfveGbf sd x'g] 5}g .
r_ ;+:yfsf k]zfut k|df0fkq k|fKt ;b:ox?n] :yfgLo lgsfox?sf]
n]vfk/LIf0f ubf{ k|fKt ug'{kg]{ Go"gtd n]vfk/LIf0f z'Ns b]xfo
adf]lhd lgwf{/0f ul/Psf] 5 .
Go"gtd n]vfk/LIf0f
z'Ns ?=
sf7df8f}+ pkTosf, sfe|], sf:sL afx]s kxf8L
If]qsf ;a} gu/kflnsf
sf7df8f}+ pkTosf, sfe|], sf:sL tyf t/fO{sf
;a} gu/kflnsf
;a} pkdxfgu/kflnsf
;a} dxfgu/kflnsf

!)),)))
!%),)))
%,)),)))
!),)),)))

5_ ;b:ox?n] n]vfk/LIf0f tyf cGo sfo{sf] nflu k|:tfj k]z ubf{

ljleGg txsf] Manpower sf] Go"gtd z'Ns tyf Certification
Work sf] Go"gtd z'Ns b]xfo adf]lhd lgwf{/0f ul/Psf] 5 .
c_ Statutory Audit /Internal Audit /Tax Audit &
Accountancy Consultancy Job/ Investigation
/Management Service/Special assignments

sfo{sf] nfluM

Pkm=l;=P= ;b:osf] xsdf

l;=P= ;b:osf] xsdf
cf/=P=aL= ;b:osf] xsdf
cGo ;b:o / ;xfossf] xsdf

laBdfg z'Ns
k|ltlbg ?=
$,))).))
#,))).))
!,%)).))
!,))).))

kl/dflh{t z'Ns
k|ltlbg ?=
!),))).))
&,%)).))
%,))).))
#,))).))

cf_ Certification Work sf] nflu

laBdfg z'Ns
k|ltsfo{ ?=
Pkm=l;=P= ;b:osf] xsdf
#,))).))
l;=P=;b:osf] xsdf
@,%)).))
cf/=P= ;b:osf] xsdf

kl/dflh{t z'Ns
k|ltsfo{ ?=
#,))).))
#,))).))
!,%)).))

h_ ?= @) -aL;_ nfveGbf sd sf/f]af/ x'g] k|f=ln=, Psn kmd{,

;fem]bf/L kmd{, ;xsf/L ;+:yf ;/sf/L k|fylds ljBfnox?,
wfld{s ;+3 ;+:yf, ;fdflhs ;+3 ;+:yf, pkef]Qmf ;d'x, ljleGg
lsl;dsf ;ldltx?, 6]8 o'lgog tyf k]zfut ;+3 ;+u7gx?
tyf cGo o:t} k|sl[ tsf ;+3 ;+:yfx?sf] xsdf Go"gtd n]vfk/LIf0f
z'Ns nfu' x'g] 5}g . t/ ljgf kfl/>lds n]vfk/LIf0f ug{ eg]
kfOg] 5}g .
em_ ;+:yfsf k]zfut k|df0f kq k|fKt ;b:on] cfGtl/s n]vfk/LIf0f
ubf{ k|fKt ug]{ z'Ns klg dfly lgwf{/0f ul/Psf] Go"gtd
n]vfk/LIf0f z'Nss} cfwf/df lng'kg]{ 5 . s'g} ljz]if If]q cyjf
s'g} sf/f]jf/df l;ldt /xg] ul/ cfGt/Ls n]vfk/LIf0f ug'{ k/]df
a'bF f g+ 5-c_ adf]lhdsf] k|ltsfo{ lbgsf] nflu tf]lsPsf] Go"gtd
kfl/>ldseGbf sd x'g] 5}g .
`_ ;+:yfsf k]zfut k|df0fkq k|fKt ;b:on] s/ n]vfk/LIf0f tyf
lgodgsf/L lgsfon] dfu u/]sf] ljz]if k|ltj]bg tof/ ubf{ 5'}
z'Ns lng'kg]{ 5 / ;f] z'Ns a'bF f 5_-c_ adf]lhd k|ltsfo{ lbgsf]
nflu tf]lsPsf] Go"gtd kfl/>ldseGbf sd x'g] 5}g .
6_ dfly pNn]v ul/Psf] n]vfk/LIf0f z'Nsdf n]vfk/LIf0f;Fu
;DalGwt cGo vr{x? ;dfj]z ul/Psf] 5}g . n]vfk/LIf0f;Fu
;DalGwt cGo vr{ 5'} x'g]5 .
7_ Go"gtd n]vfk/LIf0f z'Ns lgwf{/0f ug{] k|of]hgsf] nflu n]vfk/LIf0f
ePsf] cl3Nnf] cf=j=sf] ljlQo ljj/0fnfO{ cfwf/ dfGg' kg]{5 .
8_ ;fj{hlgs lgsfox?sf] n]vfk/LIf0f z'Nssf] xsdf dxfn]vfk/LIfssf]
sfof{noaf6 n]vfk/LIfs lgo'QmeO{ txfFaf6 z'Ns tf]lsg]
lgsfox?sf] xsdf n]vfk/LIf0f z'Ns dxfn]vfk/LIfssf] sfof{non]
tf]s]sf] adf]lhd x'g]5 .
9_ g]kfn ;/sf/n] ;+:yfsf ;b:onfO{ n]vfk/LIf0fsf] sfo{ tyf
Jofj;flos k|lt:kwf{ afx]ssf cGo s'g} klg sfo{df ;dfj]z
u/fpFbfsf xsdf of] lgb]{zg nfu' x'g] 5}g .
0f_ k]zfut k|df0fkq k|fKt ;b:on] Ps cfly{s jif{df !)) j6f
;Dd dfq n]vfkl/If0f ug{ kfpg] 5 . t/ pQm !)) j6f l;df
;+VofdWo] klJns lnld6]8 sDkgLsf] ;Ldf ;+Vof !) j6feGbf
al9 x'g' x'+b}g . ;fem]bf/L kmd{sf k|To]s ;fem]bf/n] pk/f]Qm
;Ldf;Dd n]vfk/LIf0f ug{ kfpg]5 .
t/, ?= @) -jL;_ nfveGbf sd sf/f]af/ x'g] k|f=ln=, Psn
kmd{, ;fem]bf/L kmd{, ;xsf/L ;+:yf;/sf/L k|fylds ljBfnox?,
wfld{s ;+3 ;+:yf, ;fdflhs ;+3 ;+:yf, pkef]Qm ;d'x, ljleGg
lsl;dsf ;ldltx?, 6]8 o'lgog tyf k]zfut ;+3 ;+u7gx?
tyf cGo o:t} k|s[ltsf ;+3 ;+:yfx?sf] n]vfk/LIf0f dfly
pNn]lvt kmfO{n ;+Vofsf] ;Ldf u0fgf ug]{ k|of]hgsf] lgldQ
;fd]n ul/g] 5}g .
t_ Go"gtd n]vfk/LIf0f z"Ns tyf kmfOn ;+Vof lgwf{/0f k|of]hgsf]
nflu sf/f]af/ /sd eGgfn] g]kfn rf6{8{ PsfpG6]G6\; lgodfjnL,
@)^! sf] lgod %# df pNn]v eP adf]lhd x'g]5 .

The Nepal Chartered Accountant

June 2015

64

INFORMATION

Building Fund

30 CA. PARAKARAM SHARMA

56789

The ICAN Building was constructed by the financial

support of the Government and entire members of the
Institute. The list of members contributing more than
Rs. 50000/- (Fifty Thousand) in the Building Fund is given
below.

31 CA. DINESH KUMAR CHUKE

56025

32 CA. ANUP KUMAR SHRESTHA

55555

33 CA. BHASKAR SINGH LALA

55555

34 CA. BHIM PRASAD GURAGAIN

55555

35 CA. BHOJ RAJ PANDEY

55555

36 RA. BHUMI RAJ ACHARYA

55555

37 RA. DOL PRASAD DAHAL

55555

38 CA. GANESH CHANDRA BANIYA

55555

39 RA. GANESH RAJ RAI

55555

40 CA. GOPAL PRASAD POKHAREL

55555

41 CA. JAGANNATH UPADHYAY NIRAULA

55555

42 RA. KEDAR NATH POUDEL

55555

43 CA. MADAN KUMAR NIRAULA

55555

44 CA. MURALI DHAR TIWARI

55555

45 RA. PRADIP RAJ OSTI

55555

46 CA. SANJAY CHANDRA BASNET

55555

47 CA. SURESH DEVKOTA

55555

48 RA. SURYA PRASAD ADHIKARI

55555

49 CA. TIRTH RAJ UPADHYAY

55000

50 RA. KRISHNA PRASAD PAUDEL

51151

51 RA. SHIBAJI PANDEY

51151

52 CA. KUMUD TRIPATHY

51115

53 CA. DR. GOVINDA RAM AGRAWAL

51111

54 RA. MOHAN KUMAR PARAJULI

51111

55 CA. YUDDHA RAJ OLI

51111

56 CA. BHANU BHAKTA JOSHI

51000

57 RA. DASI RAM KHANAL

51000

58 CA. SACHIN TIBREWAL

51000

59 CA. KHAGENDRA BHATTARAI

50001

60 CA. GYANENDRA BAHADUR BHARI

50000

61 RA. KULA SHEKHAR ADHIKARI

50000

1 M/S CSC & Co.

1111111

2 CA. PRABHU RAM BHANDARY

1008500

3 CA. KOMAL BAHADUR CHITRACAR

1000000

4 CA. BHARAT RIJAL

851000

5 CA. NARAYAN BAJAJ

271000

6 CA. BIJAY KUMAR AGRAWAL

251000

7 CA. SUVOD KUMAR KARN

177777

8 CA. MAHESH KUMAR GURAGAIN

167777

9 CA. PRAKASH LAMSAL

161111

10 CA. PRADEEP KUMAR SHRESTHA

155555

11 CA. SUDHIR KUMAR SHARMA

155555

12 CA. KUBER PRASAD SHARMA

136111

13 CA. MADHU BIR PANDE

125555

14 CA. NARENDRA BHATTARAI

125000

15 RA. UDAY KANT JHA "JIBAN"

115101

16 CA. TANKA PRASAD PANERU

111112

17 RA. MOHAN RAJ REGMI

111111

18 CA. PARMESHWAR MAHASETH

111111

19 CA. PRATAP PRASAD PRADHAN

111111

20 CA. PUSPA LALL SHRESTHA

111111

21 CA. SUBHASH KUMAR JHUNJHUNWALA

111111

22 CA. PRAKASH JUNG THAPA

105000

23 CA. SUDARSHAN RAJ PANDEY

101111

24 RA. DILIP KUMAR DHUNGANA

101000

25 CA. RUPESH KUMAR MAHESHWARI

100001

26 CA. SUJAN KUMAR KAFLE

75575

27 CA. MAHESH KHANAL

75555

28 RA. BADRI PRASAD BHATTARAI

61111

29 RA. BALRAM CHAUDHARI

57501

65

The Nepal Chartered Accountant

June 2015

INFORMATION

Earthquake Disaster Relief Fund

Medals and Awards

The Institute has Created Earthquake Disaster Relief Fund

for the financial Support of 25 April, 2015 earthquake
victims and the overseas accounting bodies and members
of the Institute who contribute in the Fund is given below.

ICAN has been awarding medals and certificates to the

merit holder students securing highest marks in different
levels of CA Education. Rewards are as follows.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34

ICAN
CPA Australia
CAPA
ACAN
Narendra Bhattarai
SR Pandey
Mary Carrol
Mahesh Guragain
Madhu Bir Pande
PL Shrestha
Rajesh Poudel
Prakash Lamsal
Trans frm Birgunj
KB Chitracar
Achyut Raj Joshi
Sujan Kafle
Pramod Kumar Kausik
Jitendra Kumar Mishra
Bhoj Raj Pandey
Mohan K Subedi
Dol Pd Dahal
Suresh Devkota
Badri Prasad Bhattarai
Purneshwor Shrestha
Mohan Parajuli
Sushil Agrawal
Aswini Basnet
Prasant Shrestha
Pawan K Rathi
Amit Shakya
Shree Ram Upadhyay
Prakash Narayan Choudhary
Gopal Pd Pandey
Santosh Ghimire

1,000,000.00
770,300.00
420,086.00
111,111.00
100,111.00
51,000.00
50,000.00
26,111.00
25,500.00
21,000.00
11,505.00
11,120.00
10,000.00
10,000.00
10,000.00
10,000.00
8,000.00
7,777.00
5,555.00
5,555.00
5,555.00
5,555.00
5,555.00
5,000.00
5,000.00
2,100.00
2,100.00
2,000.00
2,000.00
1,212.00
1,100.00
1,000.00
1,000.00
500.00

CA. NarendraBhattarai has contributed Rs. 251,000 for

'NarendraVashishtha Gold Medal Fund' to be provided for
the students securing highest marks in Advanced Auditing
and Assurance CAP III, although it is to be approved by
the Council.

Scholarship Fund
The List of Scholarship Fund Contributors are as follows:

The Nepal Chartered Accountant

June 2015

66