What do you understand by Nepal Financial Reporting Standards (NFRS), International Financial Reporting Standards (IFRS), Financial Action Task Force on money laundering (FATF)? What are its features? Explain.

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Nepal Financial Reporting Standards (NFRS)

 

Nepal Financial Reporting Standard (NFRS) are set of accounting standards which is issued by Nepal Accounting Standard Board (ASB) in 2013 as a global language for business affairs so that company accounts are understandable and comparable within Nepal. NFRS provides a set of principles and rules to be followed by accountants to maintain books of account which are comparable, understandable, reliable, and relevant to the internal and external users of accounting. NFRS is prepared in line with International Financial Reporting Standards (IFRS). The publication “NFRS in Banks of Nepal” is prepared by ICAN to highlight the key differences between NFRS and accounting practice in Nepal and also to encourage early implantation of NFRS by Banks and Financial Institutions. If there are no or only less significant differences, such differences are ignored. It is expected that Banks and Financial Institutions initiate appropriate measures to upgrade their skills, Management Information System (MIS), and Information Technology (IT) capacities to manage the complexities and challenges of NFRSs. One of the important measures ids to provide training to concerned staff of bank to upgrade their skills on NFRS requirement for smooth transition and effective implementation. In Nepal, Accounting Standards are developed by the Accounting Standards Board (ASB). The ASB came into existence on 10 March 2003 as per the provisions of Nepal Chartered Accountants Act, 1997. Approval of NFRSs and related documents, such as the Conceptual Framework of Financial Reporting, exposure drafts, and other discussion documents, is the responsibility of the ASB. ASB had earlier issued Nepal Accounting Standard (NAS) in line with IAS and with the gradual replacement of IAS by updated IFRS; the board has now issued NFRS on basis of recent international standards. Nepal Financial Reporting Standards (NFRSs) mean Standards and Interpretations adopted by the Accounting Standards Board (ASB).

 

Features of NFRS

 

             Fair presentation of effect of financial transaction and compliance with NFRS

             Financial statements are present on the basis of going concern principle of accounting

             Recognize accrual basis of accounting

             Materiality and aggregation

             Offsetting is generally forbidden in NFRS

             NFRS requires that at least annually a complete set of financial statements is presented

             NFRS requires entities to present Comparative information

 

             Since IFRS is not accepted in many countries, so that NFRS cannot be comparable with financial statements of each & every countries of the world.

 

International Financial Reporting Standards (IFRS)

 

International Financial Reporting Standards (IFRS) are a set of accounting standards developed by an independent and non-profit organization called International Accounting Standards Board (IASB) with the belief that a single set of IFRS is in the best interests of the global economy. IFRS provides a set of principles to be followed while accounting for transaction and events in financial statements. Today it is becoming the global standard for the preparation of public company financial statements and approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies. Approximately 90 countries have fully conformed to IFRS as promulgated by the IASB and include a statement acknowledging such conformity in audit reports.

 

Financial Action Task Force on money laundering (FATF)

 

Financial Action Task Force on Money Laundering (FATF) is intergovernmental organization founded in 1989 on the initiative of G7 summit in Paris to develop policies to combat money laundering. The intergovernmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy making body, the FATF works to generate the necessary political will to bring national legislative and regulatory reforms in the affected areas. The objectives of FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. To achieve its objectives, FATF perform various functions which are as follows;

 

Functions of FATF

 

             It examine and develop measures to combat money laundering

             It incorporates efforts to combat terrorist financing

             It counters the financing of proliferation of weapons of mass destruction.

             It implements relevant international conventions

             It criminalize money laundering and enable authorities to confiscate the proceeds of money laundering

             It implements customer due diligence, record keeping and suspicious transaction reporting requirement for financial institution and designated non-financial institutions and professions.

             It established financial intelligence unit to receive and disseminate suspicious financial transactions.

             It corporate internationally in investigating and prosecuting money laundering.

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