Institute of Chartered Accountants of Nepal

Under the Nepal Chartered Accountants Act 1997, the Quality Assurance Board (QAB) was established by the Institute of Chartered Accountants of Nepal (ICAN) and is responsible for supervising and carrying out quality assurance (QA) reviews in the jurisdiction.

The QAB is independent but remains under the governance structure of ICAN. The QAB consists of 7 individuals and ICAN provides staff, meeting space, and financial support. As of 2023, the QAB only carries out reviews of firms conducting audits of listed companies and firms who perform audit engagements of clients with a total balance sheet of NPR 500 million or more. Although all companies are subject to an audit, reviews of these other audits will be considered and conducted in phases. ICAN reports that the QA system aligns with the majority of SMO 1 requirements.

ICAN provides several resources for members about the QA process, a practice manual, documentation manual, and publishes an annual QAB Report.

Upon the recommendation of AuSB, ICAN Council has approved the Nepal Standards on Auditing 2024 for voluntary compliance for audit of financial statements for periods beginning 16 July 2024 and for mandatory compliance for audit of financial statements for periods beginning 16 July 2025 except for NSQM-1, NSQM-2, NSA 220, NSA 600 and NSRS 4400 which are approved for voluntary compliance for audit of financial statements for periods beginning 16 July 2024 but for mandatory compliance from 16 July 2026.

ICAN has been incorporating quality management standards in its training. A training was conducted in collaboration with ICAEW in 2022. Other CPD sessions have been offered around the changes introduced in the quality management standards. ICAN plans to launch additional interactive sessions and reference documents around quality management as soon the AuSB adopts the standards.

ICAN is encouraged to support the AuSB in adopting up-to-date standards as soon as possible and continue to provide implementation support to members regarding ISQM 1, 2 and ISA 220 (revised). ICAN may also need to consider if its QA reviews should be also updated, and its reviewers need specialized training to inspect systems of quality management.

Current Status: Review & Improve

ICAN is directly responsible for establishing initial professional development and continuing professional development (CPD) requirements for Nepalese professional accountants, including issuing certifications, conducting professional examinations, and coordinating educational curriculum with universities. In 2014, the Nepal Chartered Accountants Act 1997, as amended in 2004, established a Board of Studies, chaired by ICAN leadership, to oversee the quality of professional education in Nepal.

In order to use the designation of Chartered Accountant and offer accountancy services, individuals must complete an initial Chartered Accountancy Course offered by ICAN (individuals may enter at different levels depending on higher education), pass ICAN’s final examination, complete 100 hours of IT training as well as a 15 day General Management Communication Skill (GMCS) course, and have three years’ practical experience. To offer auditing services as a Registered Auditor, Chartered Accountant members must obtain a Certificate of Practice from ICAN. Candidates for the Certificate of Practice must have (i) acquired a Chartered Accountant Membership Certificate and (ii) completed at least three years of practical training in auditing under a qualified Chartered Accountant with a Certificate of Practice.

In 2023, ICAN revised the Chartered Accountant Certification program’s curriculum to be in line with IES and verifies compliance with the requirements through its Board of Studies. It also works with universities to revise and update their curricula in line with IES.

As for CPD, members who are in public practice are required to complete at least 30 hours each year and 120 credit hours in a rolling period of three years. CPD is offered in-person and virtually, via formal training, research activities, attending conferences, seminars and webinars, and earning other accredited credentials. The Accounting Standards Board of Nepal, Auditing Standards Board of Nepal and Office of Auditor General of Nepal also conduct various CPD trainings.

ICAN reports 21 CPD events in 2020, 25 in 2021, and 31 in 2022. This does not include stand-alone webinars or seminars which also qualify for CPD credit. ICAN has also developed online classes for its members.

Current Status: Sustain

Under the Nepal Chartered Accountants Act 1997, the Auditing Standards Board (AuSB) is responsible for establishing applicable auditing standards to be applied in Nepal. The AuSB developed Nepal Standards on Auditing that are based on the 2016-17 ISA.

ICAN is considering the adoption of the revisions effective as of December 2022 and has finished the review and mapping process, but is yet to be recommended by the Ethics Committee to the Council. It is expected to complete this process soon and to issue the Code of Ethics 2024 based on the IESBA Code of Ethics 2022.

ICAN provides implementation support by conducting training, workshops, and symposiums on applicable standards to educate members and stakeholders. Additionally, it develops and disseminates implementation guidance to promote an enhanced understanding of the standards and procedures in place. In 2023, ICAN developed a guidance on audit for SMEs (in Nepali language) and in between 2022 and 2023, organized 31 CPD events. ICAN reports that its responds to IAASB exposure drafts, when applicable.

ICAN is to update when the revised ethical code is adopted.

Current Status: Review & Improve

The Nepal Chartered Accountants Act 1997 provides the Institute of Chartered Accountants of Nepal (ICAN) with authority to set professional conduct rules. ICAN has adopted the 2021 International Code of Ethics for Professional Accountants. ICAN is considering the adoption of the revisions effective as of December 2022 and has finished the review and mapping process, but is yet to be recommended by the Ethics Committee to the Council. It is expected to complete this process soon and to issue the Code of Ethics 2024 based on the IESBA Code of Ethics 2022.

ICAN reports that it includes a compulsory ethics course as part of its CPD requirements and enforces the requirements through its Monitoring Committee. To further assist its members, ICAN has published additional guidance (such as on NOCLAR), case studies and issues responses to frequently asked questions related to ethics.

ICAN is encouraged to continue its active adoption of new and revised requirements when issued by the IESBA.

Current Status: Review & Improve

The Government of Nepal has entrusted the Accounting Standards Board, Nepal (ASB Nepal) with the responsibility to develop accounting standards for the public sector. The current version of Nepal Public Sector Accounting Standards (NPSAS) is based on the 2017 cash-basis IPSAS.

As part of using its best endeavors, ICAN maintains an active working relationship with various government bodies and disseminates updates and other relevant information to support implementation of NPSAS. As public financial management is a priority in Nepal, ICAN formed a committee to support the government in strengthening the public financial management system and the implementation of NPSAS. This committee is called the ICAN Public Finance and NPSAS Committee.

Additionally, ICAN is in the process of developing its own certification course on Public Financial Management for its members. The Public Finance and NPSAS Committee has prepared a study report on “NPSAS implementation in Nepal” and the report is being prepared and submitted to the Ministry of Finance. ICAN has also signed an MoU with the Securities Exchange Board of Nepal, Nepal Insurance Authority, and Inland Revenue Department to collaborate on policy matters. Further, ICAN has been closely working with the Supreme Audit Institution of Nepal, the Office of Auditor General of Nepal and the Central Bank of Nepal on other implementation activities.

Current Status: Sustain

Under the Nepal Chartered Accountants Act 1997, as amended in 2004, the Institute of Chartered Accountants of Nepal (ICAN) is responsible for establishing an investigation and disciplinary (I&D) system for all professional accountants. In 2023, ICAN conducted a detailed self-assessment of its I&D system against the requirements of SMO 6 and reports its procedures meet the best practices.

ICAN established a Disciplinary Committee and Monitoring Committee to enforce compliance with technical and professional standards. The Disciplinary Committee has quasi-judiciary power to investigate any complaint filed against a member for violations of practice with respect to professional standards, ethics, and laws and recommend sanctions to ICAN’s Council while the Monitoring Committee monitors possible violations and breaches of professional conduct by ICAN members. A Disciplinary Investigation Division has been established under the Technical Directorate to support the Disciplinary Committee and carry out the operational processes of the investigation. ICAN issued Disciplinary Investigation Procedures 2076 (2019) to formalize timeframes and the disciplinary actions initiated from the institute to the members.

ICAN reports that it continuously liaises with other regulators to enable ICAN to impose appropriate sanctions. Moreover, all I&D cases, where sanctions are imposed, are published in ICAN’s annual report and are made public and is available on ICAN’s website and the national newspaper. ICAN indicates that it educates its members on the importance of adhering to the IESBA Code of Ethics and Rules of Conduct and potential consequences of non-compliance and the I&D procedures through continuing professional development programs and guidance publications on the website.

In 2020, ICAN introduced a KYM (Know Your Member) portal to keep members updated by sending monthly e-news published by the institute. Further, ICAN launched a UDIN (Unique Documentation Identification Number) system which is compulsory for all practicing members signing audit reports or certifying any other reports to track their work and conduct.

Current Status: Sustain

In Nepal, ICAN does not have any responsibility for developing accounting standards. The Accounting Standards Board (ASB) develops the applicable accounting standards, Nepal Financial Reporting Standards (NFRS), which are aligned with IFRS.

ICAN supports its members with the application of accounting standards. It also works closely with other regulators (for example, banks, insurance companies, securities etc.) to ensure effective implementation.

ICAN and the ASB have been individually, and jointly, holding training programs, educational initiatives, workshops, and IFRS certification courses to generate awareness and to educate relevant stakeholders on all the standards. ICAN participates in the standard-setting process by reviewing and responding to exposure drafts, where applicable.

Current Status: Sustain