The Institute of Chartered Accountants of Nepal (ICAN) has announced the implementation of NFRS in Commercial Banks from fiscal year 2015/16. However, Nepal Rastra Bank has issued its directive to commercial banks to prepare their financial statements of 2017/18 based on NFRS. NFRS is principle based a high quality standard which is divergent to local GAAP. Adoption of NFRS impacted greater areas including financial reporting as well as loan loss provisioning requirements. Out of these Financial Instruments, Interim Financial Reporting, Segmental Reporting, Employees Benefits are important. Interim Financial Reporting and Segmental Reporting require greater disclosure of information in interim as well as annual reporting. Whereas NFRS on Financial Instruments has greater impact on presentation, classification, measurement and disclosure of financial instrument including loan loss provisions.
The Local GAAP consist of rules on loan loss provisions prescribed by NRB, whereas NFRS prescribe principles to recognize impairment loss on loan and advances based on incurred loss model. This requires changing the total mechanism of loan loss provisions and requires large volume of past data. The impairment loss determination task is not only the responsibility of Finance Team but it also require rigorous involvement of people from credit department and IT department. In this regard, we have planned to conduct a comprehensive training programme on Financial Instruments, Interim Financial Reporting, Segmental Reporting and Employees Benefit Accounting.