Nepal Financial Reporting Standards (NFRS) come in two flavors — full NFRS and a simplified NFRS for SMEs — and applying the wrong one can mean redoing your financial statements.
Full NFRS
Aligned closely with full International Financial Reporting Standards (IFRS), full NFRS is generally required for publicly accountable entities — listed companies, banks, insurance companies, and other entities holding assets in a fiduciary capacity for a broad group of outsiders.
NFRS for SMEs
A simplified framework designed for entities without public accountability — most private limited companies, closely-held businesses, and smaller enterprises — reducing disclosure and measurement complexity while still producing internationally comparable financial statements.
How to Determine Which Applies
The Accounting Standards Board Nepal sets the applicability criteria based primarily on public accountability, not simply company size — a mid-sized private company with no public shareholders or fiduciary role will typically use NFRS for SMEs, while even a smaller entity handling public deposits (like certain cooperatives) may need full NFRS.
Why This Matters for Foreign Investors
International investors and lenders often expect a bridge between NFRS and IFRS for consolidation purposes — worth flagging early with your accountant if you have foreign shareholders reporting under a different standard.
Unsure which NFRS framework fits your company? Company Sathi can confirm your reporting obligations and prepare statements accordingly.
